Real Estate Articles » Land Investing

Self Directed Ira's = Safer Harbor

By: Wendy Lovelace
Submitted: 02:11PM on Thursday 09 April 2009

While a self directed IRA is new concept to many people, it is not new to the investment world. 98 percent of the IRA market, approximately $3.7 trillion, is associated with the traditional providers and traditional IRA’s. These banks and brokerage houses, with their heavy marketing dollars, created a misconception that all you could do was buy stocks, bonds and mutual funds. While they preached that diversity was what they were offering, the bottom line was that the money was tied up in intangible assets… assets that as the stock market fell, lost their value. Stats say that 90 percent of the IRA market is dominated by firms that don't give you the full list of opportunities to diversify, leading investors into the uncomfortable position of inadvertently putting all their eggs into one basket.

One of the main advantages of a self-directed IRA is that account holders can achieve true diversification through both traditional and alternative investments. One can immediately see the benefit of investing not only in traditional stocks, bonds and mutual funds but also in the specialized accounts of the self directed IRA. These specialized accounts would include anything that personally benefits the investor or close family members (except for life insurance, collectibles and investments as restricted by the IRS), and enables investors to acquire tangible assets such as land, rental property, and businesses. Utilizing these options can help provide a steadier heading during choppy financial seas.

Another benefit the self directed IRA involves is using retirement investments to purchase land. Because most land purchased this way is made in cash, the income generated is pure profit directed back into the IRA. This allows investors to have a consistent cash flow off of their retirement investments, something you would not see in traditional investing methods.

While this recession has wreaked havoc on many people’s investment portfolios, it has had a positive outcome… the smarter investor. Instead of blindly putting money into areas traditional providers direct them, the new investor is taking the time to learn about their investment options. This is the smartest strategy of all. Sit down, research and educate yourself. Check into your options, ask questions, and take an active and hands on approach to your investing dollars. By doing so, you’ll not only have a portfolio diversified into many different assets, but you’ll also be more flexible with market trends. That’s the kind of investing that leads to a safer harbor.