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Why Self-Directed IRAs are Ideal for Investing in Real Estate Debt

Updated: Feb 14

Many investors are looking to build and preserve wealth over the long term to help meet their retirement goals. Traditional and Roth IRAs allow you to invest in stocks and mutual funds. What about investors who want to avoid stock market volatility but gain the benefits of these tax-advantaged accounts? Enter the self-directed IRA. Self-directed IRAs provide investors with the flexibility to select a wider range of assets beyond stocks and bonds. These include physical real estate or passive mortgage investments that you already understand and rely on for higher returns. Your retirement funds are held by a custodian of the retirement plan, which acts as a third-party administrator, recording deposits and distributions from your account. Here are reasons why a self-directed IRA can help you meet your retirement and overall financial goals:

  • Investment Flexibility. Investors have the flexibility to invest in a wide range of alternative assets beyond the options offered by conventional retirement accounts. These include physical properties, private real estate debt, or private equity.

  • Greater Control. Investors have direct control over their investments. They evaluate asset classes and choose investments they believe will perform well based on their personal interests and expertise, aiming for solid returns that align with their retirement goals.

  • Potential for Higher Returns. Turning to non-traditional investments that are outperforming the stock market can help you achieve your goals faster. For example, as interest rates rise, passive mortgage investments often provide a steady stream of income in the form of interest payments, maximizing retirement funds.

  • Tax Advantages. Investors gain the standard tax advantages of traditional and Roth IRAs that include deferring or paying no taxes. Depending on the type of IRA, these include making tax-deductible contributions or tax-free withdrawals upon retirement.

Self-directed IRAs combined with passive mortgage investing can be versatile tools for investors looking to take greater control over their retirement investments and increase the value of their portfolio.

Contact us for guidance on whether these strategies can help meet your investment and overall financial goals.


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