“Get a job. Buy a house. Invest in the stock market. Listen only to money managers.”
Rinse and repeat.
Most of us have been so exposed to this dispute over “usual” advice that, at this point, we don’t know any other way to think. It’s a shame. And when just two percent of the $ 4.8 trillion in IRAs is put into self-directed IRAs, it’s obvious that most people are listening, flushing, and repeating, and doing little else to protect their retirement.
But what if the usual rules, which can work for many, don’t actually represent good advice for you and your specific situation? In that case, you may have a rude awakening – self-directed IRAs might have been your best option from the start. Here are three reasons why this could be the case.
Reason n. # 1: Expanded investment options work best for savvy investors
Self-directed IRAs are ideal for people with investment experience, especially if their area of expertise is outside the traditional confines of the IRA.
For example, self-directed IRAs can allow you to invest in real estate, precious metals, private companies, intellectual property, and the like. Frequent real estate investors can have much better luck saving money for retirement when their IRA works within their scope of expertise.
This is not to say that traditional investment in index funds, mutual funds, and the stock market is worthless. Instead, a self-directed IRA “opens up” a wider range of possibilities than traditional channels. This gives you more options to direct your own future and your family’s financial destiny.
Reason # 2: Invest in what you know, instead of relying on experts
Many people earn their money by investing wisely in a specific category; it’s just not always the kind of investment that traditional IRAs allow. If you know real estate, a self-directed IRA can allow you to invest in real estate, generating a return on investment without depending on the success of the stock market.
However, there is more out there than just real estate. Investments in private companies are also popular in self-directed IRAs. Many investors who have worked primarily through these investments find that a self-directed IRA gives them the freedom to set aside retirement on their own terms.
What is the alternative that most people live with? Put your investments in the hands of experts, experts you rarely know. Money managers and fund managers often give their clients a return on investment, but not without charging a fee for their problems.
Reason n. 3: true portfolio diversification
“Diversify, diversify, diversify.” It is the “location, location, location” of the investment world. Yet many of the same people who tell you to “diversify” don’t recognize that all of your money is in one place: the stock market.
What about true diversification? What about precious metals? Real estate? Intellectual property? True diversification separates your investments from the changing winds of the stock market and allows you to feel secure while projecting a broader network than traditional IRA investors.
If, at this point, you’re kicking yourself for not investing in a self-directed IRA, don’t worry. Fortunately, it is not too late to invest on your own terms.