They say if you have never been wild when you are young, you can’t be wise when you are old. With self-directed IRAs to take care of your grey hair days, be assured that at least you are in safe hands. When people in their retirement days think about comfort living, they think of some very basic amenities – which is a good thing in case they don’t have enough to accumulate loan and do not wish to be burdened by debt. That said, what about the idea of being able to invest?
In its simplest, an IRA (Individual Retirement Account) is a self-directed repository which acts as a retirement vehicle to propel investments, which in turn drives returns. They have often been tagged as the most phenomenal ways of building wealth within a retirement plan. To make things secure and to minimize the risk element that lurks around any financial vehicle, the IRC (Internal Revenue Code) has defined some rules absolutely clearly.
The Pros of Self-Directed IRAs
With an assortment of financial products being sold in the market today, you may ask why one should opt for self-directed IRAs. The reason is simple: there is a huge range within the periphery of IRA in which you can consider investing – that’s where the apparent appeal of IRAs lie. There are options like real estate, cattle, oil and gas, promissory notes and gold that you can explore as an investment through self-directed IRAs.
When it comes to fluctuations in retirement balances, they are sharp and they often are on a downhill. The self-directed IRAs give you access to certain products that simplify the task of handling critical assets like property, business, etc. In its bare bones, IRA is a private investment, which is what makes it all the more return-centric than any government investment. And then, there is the scope of maximum tax-deferred benefits – something that has lured people of all ages, since ages. All this along with the advantage of being able to fund them immediately and easily, makes self-directed IRAs an inimitable investment option. But is there a downside?
The Cons of Self-Directed IRAs
While you can’t exactly label these are disadvantages, there is a downside to investing in something as promising as IRAs. Firstly, you have to be extra cautious about the fact that the investments that you are planning to make are feasible. Also, there is a set of rules and guidelines that you need to be fully aware of before you invest in a financial instrument like them. Misunderstanding the purpose of this investment tool is also a common mistake that people make with IRAs.
If you are still wondering about the nature of IRAs, here is the gist of it all. Self-directed retirement funds, such as IRAs, are risk averse to a major extent; however, the element of risk is not altogether absent in them. Your mantra should always be – never to put all your eggs in the same basket.
Rick Pendykoski discusses retirement planning mistakes you must avoid to lead a financially secure retirement life. He advises people to make the best use of 401k investments and avoid premature withdrawals from the account. For more information on how to maximize the benefits of IRA investments, visit SDRetirementplans.com.
This article is a guest post. If you would like to write for Money Soldiers, you may visit the Write for Us menu for details.