Investing as an IRA: The Basics

When many people hear about IRAs, they immediately think about traditional options such as Roth IRAs or SEP IRAs, each of which allow you to have a certain amount of control over how your money is invested. However, self-directed IRAs are also an option, and they provide an even greater amount of control over how your funds are invested. You may have not heard much about these self-directed IRAs in the past, but they are a completely different category of retirement accounts and should certainly be considered when you’re looking for a way to diversify your retirement investment portfolio.

What Is a Self-Directed IRA?

A self-directed IRA puts you in complete control over how your investments are managed. Even though your account is administered by a custodian, your assets are not invested at the discretion of this custodian. Instead, you can dictate what the funds are invested in based on your own comfort levels and knowledge of your investment options.

It is important to note that self-directed IRAs are generally recommended for savvier investors who are looking for a way to better diversify a tax-advantaged account. These accounts put you in the driver’s seat more than any other type of retirement account because all investment decisions rest solely on your shoulders.

Self-Directed or Self-Managed?

It is not uncommon for people to use the terms self-directed IRA and self-managed IRA interchangeably. While there may be some similarities, these two terms often have very different meanings and can refer to two very different types of retirement accounts. Self-managed IRA accounts do allow you the option to invest in a variety of different types of investments, and you are the person responsible for making the decision. However, a self-managed account still limits what type of investments you can choose from. Conversely, a self-directed IRA doesn’t put those restrictions in place and allows you to invest in any sort of SEC-approved security.

Self-managed IRAs still limit you to the type of investments you can make. Essentially, you will have to choose between stocks, mutual funds, bonds, and ETFs. Unlike self-managed IRAs, self-directed IRAs open up the list of possibilities considerably. You can invest in those types of assets if you choose, but you can also invest in private placements, commodities, precious metals, real estate, limited partnerships, tax lien certificates and any number of other asset types.

How Do You Open a Self-Directed IRA?

Most IRA providers allow you to open a traditional IRA at your own discretion. However, they will limit you to your investment options. The only catch involved in opening a self-directed IRA is the fact that you do need to choose a qualified self-directed IRA custodian who specializes in such accounts.

Different custodians offer different types of investment options, so it is important that you find a custodian who offers the type of investments that you’re considering. For instance, if you want to invest as an IRA into a real estate investment, you will need to work with a custodian who offers real estate investments.

It is also crucial that you remember that self-directed IRA custodians are not legally allowed to offer financial advice. In order for your IRA to truly be considered “self-directed,” your custodian has to remain hands off other than providing you with a list of investment options and facilitating the investments that you choose.

Once you have chosen the custodian who you are going to work with, they will give you a few forms that you need to fill out to open up your investments. After the forms are filled out and you have designated a checking account for your investment funding, you are ready to start choosing the types of assets that you will be investing in.

Benefits of a Self-Directed IRA

The most obvious benefit of a self-directed IRA is the fact that it puts you in complete control of your retirement account. If you are a savvy investor who has proven that you know how to choose investments in the past, these IRAs provide an incredible opportunity for you to quickly build wealth through your own expertise.

Additionally, the number of options that come standard with most self-directed IRA custodians make them an incredibly tempting offer. For instance, if you’re more interested in investing in precious metals or real estate, you will need to work with a self-directed IRA custodian. The number of options make self-directed IRAs a much safer investment choice, as you can diversify your portfolio.

You can make the decision to invest in a self-directed IRA today simply by contacting a custodian who offers the investments you’re interested in. Since Streitwise is compatible with multiple self-directed IRA custodians, we have become one of the go-to sources for self-directed IRA investments. Here’s more information about how to get enrolled in Streitwise with your self-directed IRA custodian.

Alex Wills

Mr. Wills is the Marketing Director and Head of Product for Streitwise.

Prior to joining Streitwise, Mr. Wills was Head of Paid Media at Bitcoin IRA and Fortress Gold Group. Previously, Mr. Wills was the Director of Lead Generation at GTMA, a real estate marketing agency, where he founded the paid media department that oversaw a large nationwide portfolio of multifamily properties. Mr. Wills holds a Bachelor of Science degree in Marketing from the University of Florida.

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Performance: Past performance is not a guarantee of future results. All historical returns, target returns, or hypothetical projections may not reflect actual future performance.
Risk: This investment involves a certain level of risk and may result in partial or total loss. We cannot guarantee that we will reach our target return for our investors.
Tax: Prospective investors should confer with their tax advisors regarding the tax consequences based on their particular circumstances. Neither Streitwise nor any Solicitor assumes responsibility for the tax consequences for any investor.
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¹ Dividends & returns: Current annualized dividend based on the most recent dividend declaration as of the quarter ending 9/30/2024. Dividend return calculations based on NAV at the time of dividend return. 3Q24 dividend payout of $0.13/share equates to a 7.2% dividend based on the current NAV. The REIT has averaged a 7.2% annualized dividend yield since 2020 and a 8.3% annualized dividend yield since 2017 based on the average NAV for the respective periods. See Quarterly Report for all returns history.
² Source: FTSE NAREIT All Equity REITs vs S&P 500.
³Sponsor Performance: Related to investments by Sponsor, Tryperion Holdings, as part of one of its prior programs, and not of any of the Streitwise Entities. Reflects gross IRR on realized investments in the Sponsor’s investment portfolio since inception. Sponsor performance data as of 4Q23.
⁴Target returns: We will seek to invest in real properties and other real estate-related assets that we believe can produce a strong return through a combination of cash flow and appreciation. We cannot guarantee that we will reach this target return for our investors.

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