When most people invest in IRAs, the goal is to create a supplementary retirement account that offers tax deferment (or other tax benefits), along with higher-than-average returns thanks to compound interest. However, you are reliant on a management team to direct investments on your behalf. With a self-directed IRA, you have the opportunity to decide how your money is invested. You could, for example, choose to invest in real estate, or notes, while still enjoying the benefits associated with the IRA structure.
Some people choose to use IRA funds for the purposes of direct investment, often in a family-owned business. However, there are very specific guidelines for your self-directed IRA investments, so look into these carefully.
Gold. Silver. Diamonds. Art. Wine. Baseball cards. Stamps … A collector’s vault or an investment opportunity? Tangible assets are just another form of investment. The intrinsic value of gold, diamonds, silver, titanium, and other fine commodities have been demonstrated through time. While the value of collectibles like sports memorabilia may shift, you can generally expect them to retain some value, as long as they are kept in good condition.
An annuity is an award or settlement of some type that pays the holder a fixed sum annually for a set time period, often throughout the lifetime of the beneficiary. Winning the lottery could result in annuity payments, as could being awarded a settlement in an accident or injury lawsuit.
Investing in annuities can occur when those who are entitled to annuities prefer to receive a lump sum now rather than receiving fixed payments over many years. They transfer their annuity payments to an annuity firm, in exchange for a lump sum that is less than what they would have received over the long run. Those who invest in annuities receive annual returns, and all funds receive tax-deferred status until they are withdrawn.
This type of investing is a long game, which makes it ideal for younger adults saving for retirement, because a return is guaranteed. However, it can also involve high penalties for early withdrawal, so it’s best to understand all the terms before making a commitment.