For decades investors have been using Individual Retirement Accounts as a cornerstone of their retirement planning. Depending on the type of IRA they offer substantial tax savings today as well as at retirement. As a long term investment the traditional vehicles in an IRA; mutual funds, bonds and money market funds to name a few; have provided a smooth ride to retirement. All investments entail risk, investing in a traditional IRA under professional management helps to lower that risk.
There is a flavor of IRA designed for the more experienced investor who is willing to accept increased risk in exchange for greater returns than can be anticipated from a stock garden IRA. A self-directed IRA can take advantage of many more investment possibilities and, as the name indicates, is controlled by its owner.
The investment opportunities allowed in a self-directed IRA and not found in the traditional retirement accounts include private equity offerings, individual stock, promissory notes, LLCs, commodities, precious metals and real estate. If it was properly vetted self-directed fund could hold an interest in a yak farm in Tibet.
Self- directed accounts retain all the favorable tax treatment as a traditional IRA and for an investor expecting higher returns, or income in the case of real estate, the deferred the tax liabilities can lead to a healthier bottom line.
There are certain restrictions on what can make up a self-directed IRA, collectible coins; art and jewelry are a few of the prohibited investments.
Another restriction of a self-directed IRA is the rule that the owner or those directly related to the owner cannot benefit from any transactions of the account. An example of this is when an investor purchases an income property and rents it out to his kid at college. The asset value of the property and any income it generates would be subject to regular tax rates.
A self-directed IRA is an ideal vehicle for high earning investments like income or commercial property. The tax deferred nature of an IRA greatly enhances a portfolio’s yearly compounding rates adding value to your bottom line.
If you are an investor seeking stronger returns on your capital as well as more control over your investments, property held in a self-directed IRA may be the investment vehicle you have been waiting to board. The team of professionals at Investment Property Experts can guide you in your investment property voyage. IPX has your needs covered from acquisition and financing to day to day management of the property.