As a retirement investor, you may be actively considering ways to improve the returns and growth potential of your retirement fund. Hard money lending is a wise choice because not only will it guarantee returns and growth; it has provisions to safeguard your money.
Hard money lending is also an alternative investment channel for those who are looking for something other than the age-old investment vehicles of the broad bond market and the stock market.
With a self-directed IRA, you may decide how to invest your retirement funds without the kind of limitations that usually exist on IRAs, such as 401(k) or company-sponsored retirement accounts. Many retirement account holders are not aware of the flexibility of self-directed IRAs and the investment options it offers.
Alternative Asset Ideas For Your IRA
Investment companies and retirement fund custodians set up plans like the 401(k), SIMPLE Plans and Simplified Employee Pension (SEP), and pre-packaged IRAs, they have a stake in stocks and bond mutual funds. In the alternative, owning a self-directed IRA gives you control of your retirement account allowing you to occupy the driver’s seat and take your nest egg anywhere you want to.
Here are a few alternative ideas for investing your IRA funds:
- Tax liens and certificates
- Private lending transactions
- Hard money lending
- Investing in commercial real estate
- Owning rental housing units
- Real estate fixing and flipping
- Agricultural investment in farms and ranches
- Variety of privately owned businesses
- Condominiums and apartment buildings
- Oil and gas investments
- Investing in precious metals like gold, silver, and platinum
The choices are numerous, and you are free to choose one or more of these investments. You’ll definitely find something that suits your individual goals and selection criteria.
Limitations To Self-Directed IRA Investments
There are limitations to what you can invest in with your IRA and the below activities are prohibited:
- Personal possession of gemstones, jewelry, and precious metals like gold (You are permitted to hold them only as custodian)
- Precious metals can only be held in the form of bullion or approved coin
- Investing in alcoholic beverages
- Investing IRA funds in antiques, collectibles or artwork
- Owning life insurance within the SD IRA
Self-Directed IRA Investment Strategies
Restrictions aside, there are still many different strategies you can pursue within a self-directed IRA. A few of the most common ones are:
- Inflation hedges (Investment with intrinsic value)
- Leveraged strategies
- Regular portfolio rebalancing and other defensive strategies
- Strategies to exploit momentum in the market (market-neutral strategies)
- Dividend growth strategies
- Long-short investment strategies
- Private equity and venture capital
- Real estate assets
- Hedge funds
- Different income investing strategies
Where To Start?
To start reaping the benefits and freedom of a self-directed IRA, one of your first options should be in hard money lending. Open a self-directed investment retirement account and fund it. Thereafter, you can start by finding a few borrowers or even just one borrower for a start. Instruct your IRA administrator to wire the funds to the borrower(s) when due.
As you gradually gain more experience, you can take on more borrowers as time goes by.