The Secret Wealth Strategy You’ve Never Heard Of: Self-Directed IRAs with Reneika Lightbourne

If you have ever thought I wish I had more control over my retirement money, this episode is going to blow your mind. Today I am sitting down with Renika Lightbourn, a self directed IRA expert and published author and we are diving deep into one of the most underused, under discussed and under the radar tools the wealthy have been using for decades. Self directed IRAs. If the term self directed IRA sounds dry or intimidating, stick with us because she breaks it down in plain English. We are talking how to use these accounts to buy real estate. Let's lend money like a bank, invest in crypto and even fund impact driven ventures that you actually care about, all while keeping your gains tax deferred or completely tax free. This is not just theory, this is the kind of knowledge that shifts your entire wealth building strategy. If you want more flexibility, more freedom and more financial power, this one is for you. Let's go ahead and get on into it. This is Busy Getting Better the podcast for women who are committed to prioritizing their own personal growth. I'm your host Madison J. A mindset and money coach, a first generation generation wealth builder and a woman on a mission to help you master your finances and live your best life. Money is not all we are covering though because in order to live your best life you have to become your best self. So we are diving deep into all things personal development and bringing you the mindset shifts, money, tips and inspiration. You need to go out there, be bold and build the life you can't stop daydreaming about. It's time to get busy babe. Busy Getting better. I am so excited for today's conversation. I have Renneke on the podcast with us today. She is our go to expert on self directed IRAs. I am so excited for this conversation for a couple of reasons. One being if you have been listening to the podcast for a while, you know that I went to a conference last year where they were teaching us the tax saving strategies and the investment strategies that the 1% were using and I was like jaw on ground, just like flabbergasted by some of the things that they were utilizing. And so I already know that people are going to be so excited to actually deep dive further into one of those strategies which is utilizing a self directed IRA account and all of the magic that goes on behind that. So if you haven't listened to that episode, definitely take a step back and go listen to that one so that you can get some insight. But today we are going to be diving in specifically to a self directed IRA account and all of the fun things you can go along with it. I know I say fun. I hope everyone else is going to follow along. I know you think it's fun too, but yeah. Thank you so much for coming here. We met also at a different conference that I went to, fincon out in Atlanta. And I remember we sat down at the table together. You were just such a ray of sunshine and we were talking about how you were about to become a published author and just going on and on about female empowerment and all of that. So all that to say, welcome to the podcast. Thank you so much for being here and I cannot wait for our conversation.

Wonderful. Thank you so much, Madison. I appreciate the opportunity just to come in and knowledge share and just have a conversation with you and your audience about everything related to self directed IRAs. Yeah.

Which again sounds so stuffy and boring, but I think we're going to change the minds today because it's pretty exciting stuff.

Absolutely. Participant.

Yeah. And we were just talking right before we kicked off. I wanted to congratulate you. She just finished writing and publishing her very first book on this topic. So congratulations on officially being a published author. Major accomplishment.

Thank you. Thank you. I'm super excited about it. You can find it on Amazon. The Power of Self Directed Irascible. Just wanted to very simply break it down to the everyday person that it's not filled with a bunch of jargons, it's just plain English, very simple how you can take control of your retirement.

Funds, which we love and we need more of because the personal finance world, as we all know, is filled with endless jargon and confusion. And self directed accounts aren't something that are primarily talked about, but they're very, very powerful tools and selfishly something that I'm really excited to add into my own wealth building strategies. So I have so many questions for you, so I'm really excited to get into it. Why don't we go ahead and start from the top? Can you explain to everybody what the difference is between a self directed IRA and what we typically think of when we think of IRAs, which is your traditional and your Roth that are obviously not self directed. Can you break down like the core difference between that for everybody?

Yeah, absolutely. So I think of a regular IRA at the traditional banks and brokerage firms, like the fidelities of the world, as maybe like it's a fixed menu, you have your stocks, your bonds, your mutual funds, whereas with a self directed ira, it's more like a buffet style in terms of you have the Ability to diversify. You can invest in real estate, you can invest in a private company, you can invest in cryptocurrency. It's near limitless in terms of what you can invest in. So the main difference is with self direction, obviously it's still tax sheltered, but you get to really have control and invest in alternative assets.

Yeah. Which is so exciting because there's just obviously so much opportunity out there to invest in things. And like I said, it's not typically talked about. Usually it is, you open up an IRA and you buy stocks, you buy index funds, you buy bonds, and that's typically how you're building your portfolio there. And then you hear about investing in real estate and you hear about investing in all of these other things, but they're typically not connected. It's not something that's typically talked about. So I think it's super exciting to learn all the different ways that we can utilize them. And you mentioned something key there, which is there's tax benefits to utilizing these accounts versus just going out and investing in those things on your own. If you're actually utilizing your self directed account, then you get access to a bunch of different tax benefits. So give us like a quick like what's the tax t here?

Yeah, absolutely. Like if you were to do an investment personally, you'll be subject to capital gains. Whereas if you were to replicate that same investment strategy and a traditional ira, it's going to be tax deferred, meaning, hey, you know what, you're going to get a tax break up front that you grow your account over time. Once you reach retirement age, which is 59 and a half, you'll pay taxes at that point once you take a distribution. Whereas with a Roth account you elect to pay the taxes up front. And then ultimately as long as you've had that Roth account for five years, those distributions would be tax free if you are 59 and a half, which is retirement age. So the beauty of using retirement accounts to invest is you get the tax advantages where the tax deferred accounts free.

I think what's exciting about the potential of utilizing these other assets that you can invest in in a self directed account is that you have the opportunity to expedite your returns. That's really the main benefit of kind of being in control of your money. Right. If you were like, okay, I want to go invest in private money lending or I want to go buy real estate property, I want to go do all that and you're in control so there's more risk. But with that there's more reward. And the thing that was really cool for me to learn about was you go out and you do these higher risk, higher reward type of investments in these tax sheltered accounts. And if you're utilizing a self directed Roth account, it's all growing tax free, just like it normally would. But you could totally expedite your returns here, end up with a higher level of wealth at the end of your investment strategy.

Absolutely. One of the reasons why they choose to self direct is because of the ups and downs of volatility in the stock market. Pitting self direction against the stock market, you want to diversify enough, all your eggs in one basket. But for instance, a real estate investor, we know real estate is a tangible asset. People are always going to need a place to live. Imagine if you had purchased a piece of property inside of your IRA, you know, five years ago, 10 years ago, and now the appreciation of that. Again, just another example of how you can exponentially grow your retirement account with a tangible asset. Yes, there's greater risk, greater reward, but there's also opportunities for you to be in the driver's seat in terms of how or how aggressive you want for your account.

Okay, so question on utilizing self directed IRAs, is this something that everybody has access to? Is this something everybody should be doing? Is there a certain level of income, like, are there any sort of like requirements or, or milestones that people should think of hitting or achieving before utilizing self directed accounts? Or is this something widely accessible that like the people need to know that this is something they should be doing?

Absolutely. Personally, I believe every American should have this as a tool in their toolbox. Obviously, if you're a new investor, you do want to make sure that you're educating yourself, getting comfortable, reaching out to a reputable custodian. Start wherever you feel comfortable. So whether you're a new investor or seasoned investor, you have the opportunity to use this again as an additional tool in a toolbox and really be able to grow your walls. But also investing with people that you know like and trust, that's very important. Obviously you want to.your I's, cross your t's, consult with your professional team, but it's open to the general public. Obviously, if you're not familiar with it or if it's a new concept for you, it can be a lot of information all at once. So you want to read up, you want to reach out, have your questions asked. We do free consultation to help you bring you up to speed. And then once you become a client, we're there with you every step of the way to where you have an assigned person. We don't tell you what to invest in, we don't give you tax or legal advice, but we make sure that you're doing everything in compliance with the IRS rules. You go focus on finding your investments, we focus on making sure that you're staying in the guidelines in terms of what you're able to do.

Amazing. Okay, you hit on something here that I also find really interesting. Typically when you are investing on the traditional side, you're kind of pushed down this path to work with a financial advisor where you are then giving them the money, they're giving you the financial advice. Something I found really interesting about the self directed side is that you don't work with a financial advisor, but you do work with a custodian and this person is not legally allowed to give you financial advice. Correct. So you really do need to know what you're doing. They're there to give you the like you mentioned the legalities of how to do everything correctly, but you're very much so on your own when it comes to is this a good investment or not? Should I do this or not? Like you've really got to be able to be thorough enough to be able to do your own research on the actual investment itself and make that decision on your own.

Correct? Yes. You want to do your due diligence. If you have an investment provider that you're working with or you're part of a investment group, let's just say again, you're part of real estate investment group and you, you've built up that community or you're part of that community, you're able to lean on senior investors to kind of help you bring you along. If it's new to no like and trust. Just again it allows self direction, not only allows you to invest in which you know, but also whom you know. So it's, it's very important that you do do your due diligence. We again make sure that you're staying in compliance. You can reach out to us and talk through your scenarios, but you want to incorporate those key circle of influence, whether it's a CPA or financial advisor, just to kind of help you with making informed decisions.

Okay, what are the biggest risks you would think if somebody wants to utilize a self directed ira, what are some risks that people should expect if they take this route or maybe need to look out for?

Some of the things to be mindful of is, you know, once you've made a decision to Invest, making sure that you do proper due diligence and what is it that you're investing in or making sure that you're not self dealing. So you have a long list of things that you can do on your limit list, but there's a few rules and restrictions that the IRS have that you have to be mindful of. So again, you want to get acclimated, get familiar with a few things that you're not allowed to do that'll kind of give you the broad scope of, hey, you have flexibility to do everything else. But just understanding what is it that you're not allowed to do. You're not self dealing, meaning, hey, you're not taking money from your retirement account and lending it to yourself or another disqualified person. So just being mindful of the few restrictions that comes into play. But don't let that, don't let that scare you or hinder you from actually taking action, like utilizing this tool.

Yeah, absolutely. Obviously, higher risk, higher reward. Like, we know that that's definitely true. But I think what's really exciting about this is, you know, I think a lot of people, when they follow traditional finance advice, it's very easy to set up your 401k, set up your IRA and you're like contributing money into there and you're just like, okay, I guess I'm just going to leave it there and that's just going to continue to invest until I retire. But this is exciting because if you have been wanting to invest in real estate and you don't have money saved up in a different account, but you have money sitting in an ira, you can actually move your money over to a self directed account and now you have however much you have in there to go invest in things that might be more exciting for you. Or maybe you're at a position where you're like, I'm ready for a little bit more diversification, I'm ready for a little bit more risk. Maybe you want to leave some money. You know, you're like, hey, I've got a good amount in my 401k, I have a good amount in my IRA. You know, do you see people often just moving like a small chunk over to a self directed IRA to kind of play with and start to diversify? Like, is that something that you see people do if they want to, you know, dip their toe, if you will, in this self directed world? Or are people usually like, I learned about this, this is incredible. I'm moving all my money over and I'm going to do this like where do people usually fall?

It's a combination. It's based on the individual investor. We have clients who are, okay, you know, they're comfortable in what they're doing. So they want to again get out of the stock market because they feel, you know, anxious about what's happening. So they do elect to move all input into something they know or understand more so, or feel more securely about, like real estate or investing in a startup. But then also too, I tell clients to start wherever you feel comfortable. It doesn't matter how much you have, it's more. So how do you actually the intent of how you utilize the amount that you do have. So you know, if you're a new investor or you just want to get acclimated with this, start smaller dollar amount and then eventually you can scale up. So get familiar with the process, do one or two transactions and over time ultimately you'll gain your confidence to, you know, wanting to add more into your self directed account.

Yeah, I know, I'm definitely very interested in this and have already been pondering some real estate or some private money lending and leveraging these accounts to do that because you can get higher returns and if you're doing it from your Roth account, you don't have to pay taxes on any of that gains, which is just like it feels like it's so simple and you're like, oh yeah, that makes sense.

Absolutely. You can do a joint venture, you can invest in a movie company or a film company, you can do oil and gas, you can do cryptocurrency. There's again, you have a blank canvas and you get to decide, you know what, I want to try investing in a startup, whatever you have an interest in. Essentially there's only two things the IRS that you're not allowed to invest in. That's life insurance and collectibles. Outside of that, everything else is fair game.

Collectibles being like art, right.

Or antique wine, fine wine, stamps, anything like that. And then coins, you can invest it, you can invest in precious metals, but obviously just making sure that it's an IRA approved metals. Like in terms of the percentage of the metal, but certain coins are allowed.

Is there anything different in regards to contribution limits to income limits? Is there anything different in regards to that depending on what you're utilizing versus what you're typically thinking of with your traditional accounts?

No, believe it or not, if you were to go to the IRS website, you won't see the term self directed. Yeah, you'll see the same account types that you're familiar with the traditional IRAs and Roth IRAs. So the same rules apply that you're accustomed to in terms of making a contribution to a traditional IRA. For 2025 you can put in $7,000 if you're under the age of 50 or 8,000 if you're over 50 as long as you have earned income. So in terms of the rules, it's absolutely the same that you're accustomed to now. Self direction just means that you get to truly diversify outside of the stocks and bonds or you the ability to decide exactly where you're going to put your funds. Nothing happens until you say it does.

Isn't that so interesting that it's not even listed on their website? Like it really is not. It's not broadcasted that much.

Believe it or not, Self direction itself has been around since the 70s, so about 50 years now. And there's I think when I looked at the stats recently it was like 42 trillion with a T in retirement accounts and there's less than 4% of that is actually self directed. So wow. SQL Again we have our money and stock sponsorship funds. I know I joined a brokerage firmware. I'm invested in the stock market. There's funds that will never sell. But again I wanted to personally self direct just because it gives me, put me in a driver's seat of saying, you know what, I want to tap in and use some of this for real estate or something else.

Yeah, 100%. And I'll talk for days and days about being in the driver's seat of your financial future and how important it is to know what's going on and also being able to actually make those decisions yourself. I'm curious, is there any like when I think about if someone's going to go use a financial advisor, there's typically fees that go along with that that eat into their returns. And so I'm a big proponent of, you know, getting started with investing in index funds because it's a really simple thing to navigate and there are minimal fees. If we're looking at self directed route, you are still in control of that. So I'm curious what are there any fees people need to be associated with if they go this route that to look out for? Like I'm always just telling people like make sure you understand what you're paying your financial advisor and what that's doing to your overall return. So is there an equivalent to this side that people need to know about and ask about and look at when they are making this decision to go.

This way, yes, absolutely. So for the custodian, they have the administrative fees. Us at Advancer, our focus is high quality concierge self service, making sure we're by providing you the best customer service in terms of fees or costs. We're not the highest in the industry, we're not the lowest. It's more so competitive. It's a flat administrative fee in terms of making an investment in the ira. If your IRA is purchasing a property, then the IRA is responsible for any related expenses. So you want to make sure that you do have some reserves in there. So let's just say the IRA has to pay property taxes or pay a contractor. You want to make sure that you have adequate funds to cover any of those related expenses. In terms of maintaining your IRA account with a custodian, we're not charging you a commission or anything like that.

Okay, so more like flat fee based for opening accounts, I'm assuming. Or like an annual fee, but not like an assets under management percentage?

No, we don't charge a percentage. There's an administrative fee, an annual fee because we have to do all of the record keeping. All of the IRS reporting on the back end. There is transactional fee, buying into an investment or selling it. But again those transaction fee is very cost effective. If we incur like a wire fee or somebody wanted us to express something overnight or express something, again, those are dollar fees.

So if someone's listening to this and they're like, oh my gosh, all my money is sitting in my IRA right now and I want to move it over, what does that process look like for somebody to be able to actually move their funds over into a self directed account?

Actually, it's pretty straightforward. We've really streamlined that for our clients. Three simple steps. They can complete the application directly online or whichever custodian that you prefer. But our process is pretty streamlined where you can fill the application within 15 to 20 minutes. Myself or one of my colleagues can walk you through that if you need assistance. If it's an IRA like let's just say you have an existing IRA at a Fidelity or a Charles Schwab, you fill out our paperwork, we would submit that transfer request over to the other custodian and then of course based on whatever amount that you want to move. So whether it's a partial amount or complete, you indicate that and you just make sure the amount is in cash. So if it's currently tied up in stocks or bonds, you would sell those, they would transfer the funds over to us via wire or send it to US via check, whichever you prefer. And then step three is once your account is open and funded, you then proceed with making your investment. The turnaround time for that, give or take, I would say one to two weeks, just depending on where the funds are coming from. But it's relatively quick.

Amazing.

Okay.

And then obviously I'm just like hearing everyone's questions in my head as you're running through this. So if you are going to do that right, say you're selling all your stocks in your traditional, in your Roth and you're moving them over, are people going to have to pay taxes on that?

There is no tax liabilities to do that. So if you have IRA to IRA transferred trustee to trustee, it's non taxable, non reportable. It's just one back office working with another. If you have an old employee plan before 1K, that plan provider will report to the IRS the X amount of dollars left to your account. But the receiving custodian, like at Vanta, would report to the irs. Hey, X amount was received and it neutralizes, there's no tax liabilities. So it's a tax free movement in a rollover, a direct rollover scenario. It is reportable, but it's not taxable as long as the same dollar amount comes over. Perfect.

All right, you guys heard it here first. So you can move them over tax free and start to invest in some exciting assets. I want to get into a little bit deeper into some more of these alternative investments that people can get into. And one of the things that I know you mentioned is essentially turning your IRA into a bank. Can you talk to us a little bit more about what that means? Because that sounds very exciting.

Yes. Essentially your IRA gets to be the bank. Like if you're, if you were to go to the bank and you know, wanted to request a loan, the bank is going to tell you exactly how much they're willing to lend you. They're going to tell you how long they're going to lend it to you for and they're going to set the terms, the rate. So essentially with your ira, you're in control. You essentially get to decide, you know, what X amount of dollars in retirement. And maybe you found a fix and flipper that, you know, like or trust or a private business that's looking for capital or syndicated, looking to raise money to do a commercial deal. You're going to say, hey, you know what, I have money sitting in my ira, I want to make X amount of dollars. The terms of that agreement is between the builder and also whoever they're investing with. So the provider or the borrower. But essentially you get to decide exactly how much you're willing to lend. You get to decide the terms, meaning I want to be paid, my IRA wants to be paid 10%, 12% or whatever you two agree to. And then of course the terms, meaning the length, it's a three month loan or 12 month loan, or possibly longer, five years, 30 years, whatever you guys negotiate. And then also just being mindful that if it's secured by an asset, if somebody was to default, the process to make sure that your IRA is protected. Another way you can structure it with private lending is maybe in addition to receiving interest payments, you also participate on the upside of the asset. So equity participation. So once they sell the asset, in addition to getting your money back, or your monthly interest payments or quarterly payments, you also get a portion of equity once that the asset is sold.

Yeah, so exciting. Like I said, this is definitely where I'm excited to get into it. Because fun fact, my first real estate deal was actually a private money lending deal. And I think it's a really great way to start to learn about the industry. One, because you can kind of see what's going on behind the scenes with real estate deals while also being in it. Right. You have a little bit of skin in the game and so you, you really getting to see what's going on. And if you're investing with someone who you like, know and trust, who knows what they're doing, then hopefully they're going to take you on behind the scenes. So that was a really fun way that I got to learn a lot more about real estate investing was like, hey, let me fund this deal. Obviously I was not doing it within a tax sheltered account. Right. I was just doing it. So my returns I had to pay taxes on. If you're doing it in here, that's obviously the benefit. But one, a really great way to learn about real estate. And then it's really passive. It's a really passive way to get invested into real estate. So I think that being a bank and being a private money lender is definitely a really cool way to start getting into things. And I know people that that's all they do. All they do is just lend money out. If you have the money sitting there and you want to start doing something, lend it to somebody that you know that knows what they're doing and get those returns. And it's a really fun, passive way to get into that world.

Absolutely. Most of our clients, they tend to do Passive private lending. And it gives you the ability to be part of the process. You get to actively grow your retirement account. Once you build up the relationship and rapport with a good borrower. Imagine doing that for the next three years, five years, ten years, however long. Obviously you want to make sure you're dotting the I's and crossing the t's, but it can be very low maintenance or let's stress.

Yeah, absolutely. Let's deep dive to another way. You had already mentioned utilizing an IRA to purchase real estate. You can actually purchase a home within your IRA account.

Absolutely you can. It has to be for investment purposes only, but you can certainly, whether it's short term rental or long term or midterm, you can do rental real estate in your ira. I know some of our clients, they ask, well, if the IRA owns a beach house, you're not allowed to visit, you're not allowed to stay in there, but maybe they intend to purchase it for it to be there forever, you know, in the next 10 years, 20 years. But in the meantime, the IRA owns it. All of the income is flowing from that rental property into the ira. And of course later in life when they're retired and live in that property, they can take a distribution of that asset at that time. But to your point, there's so many different strategies and rental real estate is the more, you know, having those, that mailbox money come in, come in every month.

Yeah, I kind of want to deep dive on an example here. So I'm going to walk through like my thoughts on how this would work for the people and let me know, let me know how spot on I am. But you could, let's say Hypothetically, you've got $40,000 in your self directed IRA and you want to go utilize that to put a down payment on an investment property. You buy your rental property and you are now cash flowing. Your income from the rent is more than all of your expenses. That income goes back directly into your ira. And again, if you're in a Roth account, you're not paying any taxes on this. So your rental income is now tax free and that home is going to appreciate over the 30 year mortgage. And so all of that appreciation and growth is also going to be tax free gain. So every single month you're putting money back into your account while you also have a depreciating asset and you're paying no taxes on any of that income.

Or growth, you're spot on. You can certainly use leverage or loans to buy real estate. But I do want to reference really quick, the loan type has to be a recourse loan, just meaning you're not personally guaranteeing any loans or lines. But to your point, yes, you can buy real estate using leverage, put down a down payment, and then those monthly payments come into your retirement. All of the expenses are covered. You don't have to have a property manager, but sort of sake, you know, the property manager's handling everything. They'll cover all of the expenses, but the difference flows back into your retirement account. And you can do that for the next, you know, 15, 20, 30 years, where indefinitely or leave it to your, your beneficiaries.

Yeah. How exciting. When I again, when I learned that, I'm like, are you kidding me? I did not know people were doing that and sheltering that from taxes, which is just incredible. And also, I'm curious, I don't usually like to go down like worst case scenario, but let's just play this out. What happens if that home goes bankrupt or something negative happens with that house? Can we kind of walk through like, what is the risk here? What could that potentially look like if it doesn't pan out perfectly?

Some things to keep in mind in terms of prohibited transaction, like if your IRA owns a rental property, you're not allowed to do any of this with equity, meaning you're not the one that's knowing the of painting the walls. So if you were to unfortunately do that and the IRS was to find out by doing an audit of some sort, then it does jeopardize your IRA per se, meaning it ceases to be an ira. So you would have to distribute all of the assets in your ira. So being mindful of that, if you have an asset that maybe is underperforming or for some reason you have to liquidate, then you're just taking the loss in the account. Depending on the scenario, if you were to do something prohibited, know that you possibly jeopardize your entire IRA, not your 401k. They're still looking at the actual prohibited transaction if you were to do one. But In a solo 401k, they do give you a little more flexibility to make the correction. In an ira, though, every investment you make is for investment purposes only. So if you were to do something that's not allowed by staying in that Airbnb rental that your IRA owns for a weekend, then it ceases to be an ira. So just be mindful of the few rules you need to adhere to.

This is why it's important to have a very solid custodian on your side to be able to make sure you're following all the correct rules.

I told my clients that the simple analogy is, you know, if you're at a red light, it says stop, you stop. If it says green, you go. You can drive from east coast to west coast, you can take as many roads to get there, but there's some driving rules you have to adhere to. And again, the IRS give you a lot of leeway, but there's a few things you want to be mindful of. You don't have to be an expert in it. That's why we're here. You can kind of talk through your scenario when you're getting ready to do something. But if you know for sure, like, hey, this is a few things that's not allowed. You don't want to risk or jeopardize your. Your. Your life savings.

Yeah, yeah. Let's play by the rules, people. There's clearly a lot of rules out here that are allowing for some exciting growth. So let's make sure we're walking the line. Okay. You've also talked about tax liens, deeds. Let's get into some other fun ways to be able to leverage this.

Yeah, tax lien and tax deeds. If you have a smaller dollar account and you just want to again get your feet wet, that's something you can do based on whatever county that you're in. If it's a deed state, you possibly have the ability to take possession of an asset. So imagine you go to a tax sale, somebody didn't pay their taxes, and you have $7,000 in your Roth IRA, and you went to the county, you went a bid for 5,000. Now, your IRA owns this tax lien and ultimately have the ability to end up with the property. But let's just say it's a vacant lot. You ultimately, your IRA ultimately sell that vacant lot to a developer or a big box store that's coming in the area, and you sold it to the entity for $50,000 or $100,000. That's the beauty of self direction, meaning you were able to use the strategy like tax lien or tax deed to acquire this asset for a smaller dollar amount, but then ultimately have the ability to where your earnings is unlimited. So if you sold that lot, have a piece of property for, you know, thousands of dollars more, perfectly fine. You just rinse and repeat that strategy. In terms of other types of deals, I have a lot of clients have been assisting with oil and gas recently. So mineral rights, there's so many different things that you can Do. Most of our clients are real estate specific, but even within real estate it's pretty broad. You can do again, rental properties, you can do fix and flips, you can do joint ventures. Where. So for example, let's just say you have money in your IRA and somebody else have a piece of property, a non disqualified person have a piece of property and you guys are deciding to come together and joint venture to develop that property. You have the ability to invest in syndications where you're just lp, you're passing, you're working with a GP and their team who's putting together the deal, they're doing the work and you're again just collecting that mailbox money.

Love that. So literally endless options. And you already mentioned cryptocurrency. I feel like cryptocurrency is so hot right now.

It really is like my favorites. Yeah.

Are you deep in that?

Just, you know, obviously it's still a very, it's still in its infancy in terms of the industry as a whole. So you still want to double check, triple check, do your due diligence. But the growth opportunity is there. But there's more risk, a lot more risk when it comes to crypto. But I would employ you in terms of the threshold. The dollar amount to get in doesn't have to be, you know, a crazy amount that what it would take to buy a property. So it's the first asset class since what, the 1600 or 1800. You're starting to see like the major financial institutions of the world are starting to rol talk about crypto or offering it as an etf. So that lets you know that hey, this industry, this space is going to be legitimized and we're still at the forefront. So if you're just looking to start out with a couple hundred dollars or a few thousand dollars just to get acclimated to it, it's an opportunity for you.

Yeah, I agree. I invest in Bitcoin and Ethereum, the meme coins I stay away from. But the base ones, I feel pretty confident that it's going to grow into something. But it is also so unknown. It's so volatile. So it's like don't base your retirement off of it, but definitely spice it up a little bit with your diversification.

Yeah, you can just do like A half a percent or 1% again, you're in control, you get to decide. Exactly. You have complete discretion in terms of how much or how little you want to invest, but you don't want to put all your eggs in one basket. Obviously with crypto, there's been a lot of nefarious actions over the past, but we're hopeful that it's going to get cleaned up and we're starting to see regulations come towards it, come towards legitimizing the space as a whole. I think there's opportunities you want to invest in digital assets that actually have real world use case the blackrocks of the world, they're not going to associate their self with the meme coin. That's not, that has no use. So you want to make sure to see, do your due diligence, see who other major companies are partnering with or investing with or. We're starting to hear tokenization of real estate assets a lot. I know that's really big. So looking at different asset classes that you can possibly get into early.

Yeah, absolutely. Okay. I feel like this is like a good segue. I want to talk about impact investing next because I feel like BlackRock, everyone has like the opposite thought in their mind around this. So can you explain what impact investing is?

I've actually got a couple webinars. On impact investing. I would say go to our website or our YouTube channel. If you have a social cause that's near and dear to you, you have the ability to invest in something that's environmental, renewable energy, or a small business that maybe it's a local farm. Using your IRA dollars to actively help your community, but also still grow your retirement wealth. Investing in things that are near and dear to your heart, things that you understand that you have an interest in, allowing you to have the impact that you want to. So it's just, it's diverse in terms of investing in environmental friendly assets or local farms. It just really depends on what is it that you have an interest in. But you can certainly do ESV type funding.

Yeah, that's what I was going to say. I was like, you know, I feel like some people will have a resistance to investing in these big corporations because they don't necessarily support them. But obviously investing in the big corporations is going to be the best return on your investment if you're in the stock market. Right. Tracking the s and P500. And so we talked about ESG and being able to put some money into more socially responsible or things that might align a little bit more with your own values and your own ethics. And this is like that on steroids because you can totally control it. You could go find a business, you could go find anything that you feel like is going to make an impact on your own passions and Utilize your money to actually do something with it. So I think that's very cool. You've also mentioned a checkbook ira. What is a checkbook ira? I've actually never heard this term before.

So checkbook control or an LLC IRA is one of the hidden gems within the self directed space. But it just give you greater control, greater flexibility. So most times, most of our clients are investing directly through the IRA where advance or with a custodian, they're telling us to send the money where it needs to go. So advanced, hey, send the money to this closing agent or closing attorney or pay this particular invoice for this bill. The other way is utilizing indirectly through a checkbook control or an llc. So essentially you establish your account, you fund your account with us, but then you set up a new LLC that the IRA is the owner of. As the manager. It's going to give you the authority to pay a bill, write a check, sign contracts and so forth. But ultimately the money is moved from the IRA custodian over into the LLC's bank account that you establish you have the authority to do that as the manager. And now it literally gives you control of the purse ring. You still have to follow the IRS rules. Meaning money leaving that LLC bank account is for investment purposes only. Money coming back in is the returns from those investments. If you have a rental property, the tenant send you the rental check to be deposited into that LLC bank account. If there's any expenses, property taxes or contractors you paid out of the llc. But essentially it gives you control to where, hey, if it's a holiday and the custodian is closed, you don't have to wait for us to action. Something gives you that check writing ability. But fixing flip is a lot of tax lien investors like allows you to have the ability to invest both in alternatives, but also you can also go to a brokerage IRA using that LLC and establish an account for that LLC. It's still your IRA's account, it's still tax sheltered. So let's just say, hey, you're waiting for your next real estate deal to come up, but your funds are sitting idle. Well, you have the option to put those within the stock market or a mutual fund or a CD of some sort. And then by the time you're ready for your next deal, you can liquidate out all within my llc. So just having greater, greater control, if you're more a hands on active investor or you're wheeling and dealing, then it gives you that free reinforcement.

Cool, that makes a lot of sense. You Gotta be able to move quick, move quick with that checkbook. Amazing. Are there any other lesser known, high potential alternative investments that you see people utilize that we need to know more about?

You can get as creative as you want to, obviously, depending on where you're starting out or how you know, if you're a new investor or you're a seasoned investor, just start where you're comfortable. But you can scale. The only thing to be mindful of when it comes to scaling. You don't want to make it seem like you're running a business through your ira, but there's opportunities out there, especially once you get familiar, you can go out. Like for me, when I first started, all of my deals, all of my transactions real estate related. But over the years I've been able to diversify into okay, in addition to real estate, I do crypto or private equity or precious metals. So just, you know, finding your niche and honing it and then scaling from there.

We haven't talked a lot about private equity, but this story is the thing that really interested me about it and they shared it at that conference I was mentioning. But it was the story of Peter Thiel, the inventor of PayPal. Yeah, this was where my jaw was on the ground. I was like, are you kidding me? He used, it was like $2,000 in his IRA. Yeah, yeah, yeah. And then he what it was, he invested in private equity and it blew up and he ended up turning that 2k or 3k into 5 billion.

Yeah. So Peter, the famous Peter Thiel story, he started his Roth IRA with $1,700. At the time, PayPal was a private company. He took those funds in a account he write, paid taxes on it, bought the private shares in PayPal, which is now one of the biggest companies. It's now worth tens of billions of hundreds of billions of dollars. And he was able to ultimately turn that $1700 into $5 billion. And it's in a Roth account. Those distributions will be tax free. So that's the power of self direction. Yes, Peter Thiel is a uniform in every sense. He's a billionaire. But everyday Americans can replicate that same strategy. So whether you're focusing on investing in startups or you're focusing on investing real estate or currency or syndication deals, you take that same strategy and just replicate it. Some lesser accounts that are just as important that you can self direct are ESA Educational savings accounts, Health savings account. With health savings, as long as you have a high deductible, you can look to self direct. So find out from Your plan provider and get the high deductible. If you have kids or grandkids or nieces and nephew, you can put in 2,000 per year per child for an ESA account. So those are all valuable tools. You can have multiple accounts that you are looking to partner together to do your next deal.

Amazing. Okay, wait, I just thought of a question. You mentioned the kid. So if somebody has like a custodial IRA for their children, can they self direct that?

So with us it'll be a minor account. Like let's just say you have a Roth account. As long as they can show that their child sells newspapers or they have eliminate stamp part of the family business, you can open up a Roth IRA account for that child. If they're 18 years or younger, it'll be a custodial account, meaning the parent handles everything. And then once that child becomes officially an adult, they can take over for that Roth account. So I see a lot of parents do ESA accounts for educational expenses and then of course Roth IRAs for their kids. And they're part of the family business where they're all utilizing those accounts to self direct.

This is it, baby. This is how the wealthy keep getting wealthy. They're taking advantage of all of this and they're starting them young, 50, taking advantage of that compound interest. Is there any stats or any math around like, like right, we know that the average return on the stock market is 10%. Right? Like that's a pretty well known fact. Is there any data around average returns?

It varies because it depends on what asset class you're investing in. Obviously with real estate investors, they tend to have that more steady, steady return where they're getting whether it's 8%, 10%, 12%, 15%, oil and gas planes. We see them getting back minimum of 9%, 12%, sometimes higher. So it just really depends on what, what they're investing in. Cryptocurrency, like you can literally put money into a crypto and again do your due diligence. This is not me advocating it. You can put crypto. Let's just say you took $100 or a thousand dollars and put it into Bitcoin ten years ago and you look at what it is today like rolling in it, astronomical. So it just really depends on what is it that they're investing in. Only 4% of people are actually truly self directed. Meaning there's a lot of room for us to as educators to educate and grow this industry in the space, but also for Americans to tap in and just add this as an additional tool to their toolbox. Yeah.

And I think just the overall message too is that it doesn't need to feel so scary. Right. A personal finance industry really benefits off of making it feel so complex and so scary and like you just need to outsource it. You really can learn and build that confidence in yourself and figure out what it is that you want to invest in and build relationships with people where you can be more in control and you can be the one that is actually, like you said, in the driver's seat of your financial future. Like, building your retirement plan is one of the best things that you can do for yourself and for your family. Being able to know what all of your options are and understand how you can expedite those returns and just invest in things that might be more exciting to you. I think that it's an option that more people need to understand that they have. And yeah, I think that it's really a very awesome resource. And like, guys, if you cannot wrap your head around the tax benefits here, it's absolutely incredible. So thank you for sharing all this. Is there anything else that people need to know? Anything else that you wish people understood more of or anything else that you would like to share with the audience about self directed accounts?

I would say start wherever you feel comfortable, but get started, don't wait. No one's going to care about your money more than you. No one's going to be a better participant or active participant for your wealth or your legacy or the lights that you want to live than you. So you want to be an active participant. You want to be able to just get started. Start wherever you feel comfortable, get educated, reach out, do your research, reach out to trusted advisors, build your team, be around like minded investors, kind of get some ideas of what you're looking to do. But I would say you know the lifestyle that you want to live. And this is again, just giving you the opportunity to be in the driver's seat to get you where you want to go. So your future self can thank you for what you did today.

Do it for your future self. She's going to be so happy you did okay. And if someone's listening to this and they're like, I'm ready, this is my next step, I want to take the jump. How can they find you? How can they connect with you? What's the best way for them to reach out so that they can learn more about the process and get that started?

Absolutely. I would say go to advantira.com, you can reach out to myself or one of my colleagues. You can schedule a consultation with me. I'll also provide you my phone and email address. You can also just schedule some time, put it on my calendar and be happy to kind of talk through your scenario and help you with your self directing journey. Okay.

I'll make sure all of that is linked in the show notes. So if you want to reach out, go ahead and click on that and schedule a call. Let her know where you came from. And yeah, thank you so much. I feel like this has been so eye opening and I hope it just helps paint a picture in everybody's mind about the potential that's out there and the excitement around the growth. The opportunities are endless and I think that's really exciting.

Yes. Thank you. I really appreciate the opportunity just to come in and knowledge here with your group and I'm hoping to help as many people as possible.

We'll also link your books in the show notes as well so people can go check that out if you want to learn more about it and read it. I'm definitely going to check it out myself so I can learn more. Thank you so much for being here and I will see you guys on the next episode. Sam.