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The Power of ‘Self-Directing’ your Retirement Funds

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Having been in the real estate development business for a long time, the number of people that I have run into that don’t understand what a Self Directed IRA means, is staggering. On average, I would say around 9 out of 10 people I meet, have no idea about this investment vehicle and the benefits it offers (and most of these people are sophisticated investors too).
What is a Self Directed IRA? A regular IRA or 401K lets you invest in stocks, bonds, mutual funds or CDS and in most cases, the custodian that you (or your employer) have parked the account with, limits the options available to you even within that space. However, if you roll your funds into a Self-Directed IRA, your investment options now open up to real estate, investment properties, asset-based lending, equity fund placements and so much more. Best of all, you get to choose between any of these opportunities that are available to you in the market and not those that were hand-picked by your custodian.
There are a select few investors that are stock market wizards and they can beat the market and create alpha on a consistent basis and for those people, the value proposition of an SDIRA might not be that attractive. However, the vast majority take a ‘let-it-ride’ approach to their IRA/401K investments and do not realize the amount of money they are leaving on the table by not fully considering the options available to them. Even the most conservative approach – having your Self-Directed IRA lend money with real estate as collateral – should fetch you returns over 10% consistently. And there are several other options for those looking to target more aggressive returns. Now, add tax-deferred compounding to the equation and it is not hard to see that the numbers add up very quickly.
In summary though, regardless of what an investor chooses to do, I believe it is important for him/her to know that Self-Directed IRAs are an option that should be considered seriously to see if it is the right fit for their investment philosophy. Over the years, most people that I have spoken to about it, have ended up converting their IRAs into a Self-Directed account – if not for anything else, at least to have total control over their investment options. Should you too?
The author, Shaun Vembutty, is the founder and principal at Ashton Gray Development and Ashton Gray Capital. In addition to overseeing a large amount of residential and commercial real estate development at his firms, he mentors investors wanting to venture further into real estate.
To learn more, visit www.ashtongraydev.com or www.ashtongraycapital.com.


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