A self-directed IRA lets you invest in rental real estate, private companies, and LLCs instead of just stocks and bonds. A self-directed custodian like Directed IRA manages these accounts, applying the same tax advantages as traditional IRAs. You can't invest in personal property, life insurance, or collectibles.
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You're saying the, the IRAs is the way to go? Yeah, and an IRA is one of the most popular vehicles out there right now. You know, traditionally most people are used to just buying stocks, bonds or mutual funds. But those are not the only investments that IRAs can actually hold. Self directed IRAs are, what they're called are accounts that can actually own rental real estate. Like it could own a duplex down the street. It could be invested in a small business in your community. And so these are assets that retirement accounts can actually own. You got to learn the rules on it. It's a little tricky, but for those that want to invest the time and invest in assets they know and can see, a self directed IRA could be a good option for someone to take a portion of their retirement account and look to invest it again. It's a way to diversify from being totally invested just in the stock market.
Start opportunity shifting. Shift some of your ideas into a tax free scenario like a Roth IRA or a health savings account. I have a health savings account that owns a rental property. I love to try to invest in things that I enjoy and I know we're going to make money outside of the stock market. Health savings account that owns a rental property. That's right. Well, you can self direct your retirement accounts. And we love directed ira. It's a custodian, much like a stockbroker you would think of. It's a trust company where you can invest your IRAs, your 401ks, Coverdells, SEPs, and a health savings account and what you know best. So if you know real estate, why not take your retirement account and invest it in real estate? And your stockbroker doesn't tell you this. They don't want you to self direct. Yeah. But you can take control of your retirement and invest it in tax free ways. So a great way to save taxes is to create tax free income in the first place.
Mark holder. Thank you. Doesn't the law say I can't do this? Let's talk about the law first. The only restrictions on investments you can buy with your IRA include life insurance collectibles and S corporation stock. There's no restriction on real estate or private companies. What's happened though is, is that the companies that provide retirement accounts are typically brokerages. What do brokers sell? Financial products. Now I know what you're thinking. I've never heard of this. How come I've never heard of this? I called my broker at Merrill lynch and they said I can't do it. That's not because your IRA cannot own real estate. That's because your IRA at Merrill lynch won't let you buy real estate. It's a restriction that financial institutions place on their accounts. So the first thing you're going to need to do is move your account from your broker over to a self directed IRA custodian like our company directed IRA who will let you invest in real estate, private companies or other alternative assets with your IRA funds. Now the second thing to know is really cool because the same tax benefits you get when you buy stock with your IRA apply when you buy real estate or private companies with your IRA. So if I bought Facebook stock for 100 bucks a share and I sold it for 150 in my IRA, one of the great perks is that gain goes back into my retirement account. No taxes, right? It's building up tax free in a Roth or tax deferred in a traditional with a self directed ira. It works the same way for real estate or private assets. If I bought a property for $100,000 with my IRA, I sold it for $150,000. That $50,000 gain goes back into my IRA and I pay no tax on the gain. It's either tax free in a Roth or it's coming out tax deferred in my traditional. So I get that same tax perk in a self directed IRA that I'd get at my brokerage ira. Buying stocks and mutual funds. There's a couple things you want to know when you're self directing your ira. First, these need to be investment assets. If you're buying real estate, you're buying it for investment purposes like a rental property or maybe a property you're going to flip. You can even be investing in an LLC that owns a partnership that owns a bigger property or portfolio of assets. Maybe it's a private company, it's a startup, it's a private equity fund or other private investment. Those are all acceptable assets for an ira. What you can't do though is buy assets down, benefit yourself. You can't buy a piece of real estate you're going to go live in or that your kids or other family members are going to live in. These are investment assets, not assets for personal use. The last thing I want to say on this is self directed IRAs let you invest in assets you know best. If you know real estate, why are you buying mutual funds with your retirement account? Why don't you invest in real estate? If you have a specialty in private equity or tech, why are you investing in big publicly traded companies when you could be investing in startups or other venture companies.
