Self-directed investments is a unique investment administered or held by a third party that allows for alternative investments that can potentially build tax-free or tax-deferred wealth at a faster rate than other investment methods.
Self-directed means that you can have more control over the investments and invest in things you understand and can control. You select the investment and not limited to choices like Fidelity etc. You participate in selection, and growth of the investment.
Types of Investments
In a self-directed investment the owner can invest in the following types of assets: Real Estate, mortgages, notes, private placements, precious metals, foreign currency, among other types of investments.
Real Estate in a Self-Directed Plan
Investing in Real Estate in your IRA or 401 K allows you to build wealth by not realizing capital gain or paying income on the rents or interest. This can be done by buying the real estate within your self-directed plan, or by lending to others who are buying real estate and holding a note or mortgage in lieu of the real property itself. One can have more control over the investment by creating a checkbook L.L.C. to hold the real estate, note or mortgage. They can also create a Trust for holding the investment.
Private Placements in a Self-Directed Plan
“Private Placements” is a term that refers to investing in privately-held entities, such as companies or small businesses. Bank financing may be a difficult option to obtain financing for certain projects or investments when it comes to small businesses. Some may wish to invest in a small business venture to provide development capital for companies.
Investing in Private Placements using self-directed IRA assets can be a simpler and faster process than acquiring a loan with institutional lenders. For self-directed IRA owners, this type of lending has the potential to bring higher returns than traditional investments such as the stock market or CDs. This is a high rick type of investment as although there is a potential for higher returns there comes higher risks.
Our firm can help you to establish a plan with a reputable Self-Directed IRA company. We can assist you with the documentation, with any asset transfers, and establishment of any entities necessary for the transaction. We can also counsel on and review these types of investments and transactions in order to assist you in accomplishing your goals.