Equity Trust clients share how they’re impacting their own retirement as well as future generations, why they got started with self-directed IRAs, and how their experience has been.

Want to know more? Access this case study guide with 11 client investment stories:

Equity Trust Company is a directed custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust Company is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.

All case studies provided are for educational purposes only. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal….(read more)

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Why Investors Use Self-Directed IRAs

Investing for retirement is a task that requires careful planning and consideration. Many investors choose to utilize Individual Retirement Accounts (IRAs) as a way to save for their future. Traditionally, IRAs have been associated with investing in stocks, bonds, and mutual funds. However, in recent years, a growing number of investors have turned to self-directed IRAs as a means to diversify their retirement portfolios and take greater control over their investments.

A self-directed IRA is a type of retirement account that allows individuals to invest in a wider range of assets beyond the usual offerings of stocks, bonds, and mutual funds. With a self-directed IRA, investors have the ability to invest in alternative assets such as real estate, private equity, precious metals, and even cryptocurrencies.

So why are investors choosing self-directed IRAs over traditional IRAs? One key reason is the desire for greater control and diversification. By allowing individuals to invest in a wider range of assets, self-directed IRAs offer the opportunity to build a more diverse and robust retirement portfolio. This diversification can help mitigate risk and provide potential for higher returns.

Investors who are familiar and comfortable with certain alternative assets may also choose to use a self-directed IRA to invest in areas they know and understand. For example, someone with experience in real estate may choose to invest in rental properties within their self-directed IRA. By leveraging their knowledge and expertise, investors can make informed decisions and potentially achieve greater success in their investments.

Another advantage of self-directed IRAs is the potential for tax advantages. Just like traditional IRAs, self-directed IRAs offer tax-deferred growth, meaning that any earnings within the account are not taxed until they are withdrawn. Additionally, self-directed IRAs offer the ability to invest with pre-tax or after-tax dollars, depending on the type of IRA chosen. This flexibility allows investors to customize their investments based on their unique tax situation and financial goals.

It is important to note that self-directed IRAs require careful due diligence and adherence to IRS regulations. With the increased freedom of investment options comes the responsibility of thorough research and compliance. Additionally, self-directed IRAs typically come with higher administrative fees compared to traditional IRAs, as they may require additional support and expertise in managing the alternative assets.

While self-directed IRAs offer many advantages, they may not be suitable for all investors. Those who prefer a more hands-off approach to investing or who are not familiar with alternative assets may find traditional IRAs more appropriate for their needs. Additionally, self-directed IRAs require active involvement and oversight, as investors are responsible for conducting due diligence, making investment decisions, and ensuring compliance with IRS rules.

In conclusion, the use of self-directed IRAs is becoming increasingly popular among investors who seek greater control, diversification, and potential tax advantages in their retirement portfolios. By allowing investments in alternative assets, self-directed IRAs offer the opportunity to build a more diverse and potentially lucrative retirement portfolio. However, it is crucial for investors to understand the responsibilities and risks associated with self-directed IRAs, and to seek guidance from financial professionals when necessary.