Like many people, I have a substantial part of my investment portfolio in IRAs and all invested in stocks, bonds, and mutual funds. With the market hitting all-time highs recently, I want to diversify part of this portfolio into alternative assets like real estate.
Self-directed IRAs (SD-IRAs) - The big difference with SD-IRAs vs. your traditional IRAs (Roth or Traditional) is the ability to invest in alternative assets like commodities (e.g. Gold) and in my case - Real Estate. All IRAs are required to be managed by a "custodian". Most of the traditional large IRA custodians only allow you to purchase traditional stocks, bonds, and mutual funds. However, SD-IRAs allow you to direct your investment toward alternative assets. These alternatives are sometimes viewed as riskier than highly regulated stocks and bonds.
However, when most of my invested capital is only in stocks and bonds, I think the SD-IRA offers the ability to diversify my portfolio. And, I only invest in assets where I have done my own due diligence and am comfortable with the investment. A quick google search will reveal several lists of SD-IRA custodians as well as pro's, con's and risks of SD-IRAs. For me, investing in private placement memorandums (Real Estate Syndications) fits perfectly with the SD-IRA model.
Before setting up my SD-IRA, I called my current IRA custodian to see if they have this product. And, although they don't advertise it, they do actually allow certain customers to invest in private placement memorandums. So, it was a lot easier, less costly and more convenient than I thought!
Mandatory Disclaimer - I am not a CPA or Attorney and every person's situation is different. You should consult your CPA and Attorney.
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