At this point in your life, you might be thinking about how to invest in your future. One increasingly popular way is to put your money into a self-directed IRA. With a self-directed IRA, you run the show. You are in charge of how your money is invested all while receiving the benefits of an IRA. Keep reading to learn how to invest with a self-directed IRA in Austin!
What is a self-directed IRA?
A self-directed IRA is an investment vehicle that puts you in control of where your money goes. You can choose to invest in stocks, bonds, precious metals, real estate, mutual funds, and other unique investment choices. A self-directed IRA allows a freedom that many people are attracted to. You can make tax-deductible contributions and defer any earnings you receive. The freedom of a self-directed IRA is often preferred over other investment options.
How do you set it up?
Look at different custodian services and interview them. It is vital that you thoroughly evaluate your options, as your custodian will hold your assets on your behalf. They will help process all transactions, maintain records as required by law, help with IRS reporting, as well as many other administrative tasks associated with the IRA fund. Your custodian will also advise you, keeping you from making prohibited investments.
What are the benefits?
The phrase “checkbook control” will often be heard, meaning you have the freedom to invest your money as you choose. From stocks and bonds to real estate and precious metals, investing in something new is a simple as cutting a check. You can choose to invest in a local development as opposed to something across the country.
When you put your money into an IRA, there are many tax benefits. Over time, you can defer your taxes and see tax-free profits on your investments. In addition, the fees associated with a self-directed IRA are usually less than with a traditional retirement account.
What are the risks?
The money becomes taxable once it’s withdrawn from the IRA. To evade major tax penalties, create a strategy with your custodian. Another risk is that you may have to wait longer than desired when it’s time to sell, so it can be difficult to liquify some assets in a timely manner. Just like a standard IRA, there are rules and prohibited transactions. You can never write checks for personal reasons or make investments that are prohibited.
How does it compare to other investments?
Real estate often produces some of the highest, most consistent returns, and often outperforms the stock market. This makes it a sure-fire way to invest your money. Many of the world’s richest people got there from investing in real estate. The strongest portfolios offer a diversified group of investments. This is the beauty of a self-directed IRA. You can have a greatly varied portfolio, emphasizing the industries that you feel the most comfortable in.
Before making any property investment, seek the advice of your lawyer and financial planner. Speak to your accountant to learn about the specific tax implications for your situation.
Do you want to learn more about using a self-directed IRA to invest in Austin real estate? We can help! Send us a message or give us a call today! (512) 345-9090