THREE SELF-DIRECTED IRA STARTING POINTS
It was Fathers Day weekend, and I was sitting with my sons and my dad on the boat thinking about where I was in life. Among many other things, I wondered what knowledge and experience I was passing on to my kids about the self-directed IRA industry. I remembered the first questions I asked myself coming into the industry: How do some of these people do it? How are people making money? And where do you start? And then I realized that many other folks are asking the same questions. Perhaps even you.
I once had a really great conversation with a gentleman in Redmond, WA, who told me, "$100 and a library card will get you far." True enough. But to save you (and my kids) a hundred bucks and the purchase of a library card, I thought I'd share with you the three basic self-directed IRA starting points that have provided a great foundation for my understanding of the industry.
The first is to pick the vehicle that is right for you -- and you can't procrastinate any longer! We all need to start saving for the future, and I know that for some this may be tough or maybe even a little late. (But better late than . . . well, you know.) So the first step is to find out about traditional IRA custodians, like Charles Schwab (www.schwab.com), Merrill Lynch, Edward Jones (www.edwardjones.com) E-Trade, ING, Scottrade, etc. Take advantage of their informational websites or free consultations, and don't be afraid to ask such basic questions as: How is a Roth IRA different from a regular IRA? What are the requirements and rules? And how do they work? Find out if the benefits of a traditional IRA meet your current and future needs. (Ask yourself: Do I want someone else to just choose my investments for me? Do I need some direction? Do I want to stay in traditional stocks, bonds, and mutual funds to grow my retirement fund? If your answer is yes, then you'll probably want to work with a traditional custodian.)
The second step is to explore the offerings of a nontraditional custodian that offers a self-directed IRA, such as a PENSCO (www.pensco.com) , ENTRUST, Sterling Trust, and Equity Trust. Nontraditional self-directed IRA custodians allow you to invest your retirement funds into things like real estate, tax liens, deeds, notes, etc. Be sure to research the fees (such as transactional fees, asset-based fees, etc.) and the limitations or flexibility of the nontraditional custodian accounts. (Ask yourself: Do I only want to make nontraditional investments -- such as real estate -- and I don't need to invest in the stock market, too? Will I be doing only a few self-directed investments, so I won't end up paying lots of money in transactional fees over time? If the answer is yes, then you'll want to seriously consider a nontraditional self-directed IRA custodian.)
The third step is to consider investing your funds through a financial services provider like GUIDANT FINANCIAL GROUP (www.guidantfinancial.com) that specializes in alternative retirement-account investing and financing options. Through a self-directed IRA tied to an LLC, Guidant enables account holders to invest their retirement funds in a multitude of different investments (including traditional stocks and bonds, as well as nontraditional assets like real estate, mortgage notes, personal loans, etc.). Another benefit is that Guidant gives its clients checkbook control of their investment funds, so they can purchase such things as foreclosures and tax liens on the spot without the need for custodial middlemen. This ability to diversify funds and control each investment is very attractive to many account holders once they understand the rules and regulations of this industry. You can find out more about investing guidelines at the FAQs page on the GUIDANT website. (Ask yourself: Do I want the flexibility to pick my own investments both inside and outside the stock market without custodial input? Do I want the convenience of checkbook control? If yes, then choose a self-directed IRA LLC like the one found at www.guidantfinancial.com.)
Now that you know what to look for, the world of investing can really open up to you! Once you decide what is best for you, then you can start looking into some of the most popular investments. I see investors putting their retirement funds into, like: tax liens, tax deeds, real estate (both foreign and domestic), loans and notes, REITS, PPM (private placements, hedge funds, oil wells, businesses, stocks, bonds, mutual funds, ETF (exchange trade funds), etc. This gets very exciting! Keep in mind that it is always best to discover what you have a true passion for and then combine it with your financial and retirement goals!
Invest well.
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