Many investors lean on their savings accounts to provide a nest egg for their future. Individual retirement accounts (IRAs) are a great way to save for the golden years. However, many potential investment options are outside your reach when utilizing a standard IRA.
You’ll have to open a self-directed IRA if you want to invest in other options. But what are these additional options? In this article, we’ll unveil some of the best self-directed IRA private investments.
Self-Directed IRA Private Investments
While traditional IRAs can be a great savings option, investors have little to no control over how their assets are invested, and there’s a limited selection of available investment options.
With traditional IRAs, your investments are usually handled by the bank or brokerage that you opened the account with, and the funds are only allowed to be invested in the following:
- Mutual Funds
- Money Market Funds
- Exchange-Traded Funds (ETFs)
- Certificates of Deposit (CDs)
All of these options available to traditional IRAs are publicly traded assets. Stocks, bonds, and ETFs are all traded directly on stock exchanges. In contrast, mutual funds, money market funds, and CDs are not traded on exchanges but are still considered publicly available investment vehicles.
Self-directed IRAs, however, offer additional investment options, including the ability to invest in private assets such as:
- Real Estate: You can directly purchase and manage various real estate types, such as multifamily, single-family, and commercial properties, that provide rental income and potential appreciation.
- Private Placements: You can invest in securities issued by private companies, including LLCs and limited partnerships.
- Precious Metals: Self-directed IRAs allow you to invest in metals such as platinum, gold, and silver that may increase in value over time.
- Promissory Notes: You can issue capital as a loan to individuals or other entities, which will generate interest over time.
- Cryptocurrency: Depending on your self-directed IRA, you can invest in digital currencies such as Bitcoin and Ethereum, which can increase in value.
In addition, self-directed IRAs can typically invest in the publicly traded options available to traditional IRAs, further enhancing the selection of available options.
But how do these self-directed IRA private investment options stack up against each other? Let’s compare.
While each option is available to investors with self-directed IRAs, each has its characteristics with regard to its liquidity, level of investor control, tangibility, and income potential—all things investors should consider before deciding on where to invest funds from a self-directed IRA. Moreover, each option requires expertise to increase the chances of success and profitability.
This is a crucial component of self-directed IRAs vs traditional IRAs. With increased flexibility and agency comes increased complexity and burden of responsibility. Private investments, in particular, may come with increased risks and require increased diligence from the investor, so you should always consult with your financial advisor.
Public vs. Private Investments
Now that you understand what self-directed IRA private investments are available to you, you may be wondering why an investor would want to take on extra responsibility for more options. This will always depend on a combination of your financial goals and risk tolerances.
Public investments involve purchasing assets traded on public markets or stock exchanges that are widely available to many potential investors. Moreover, public markets are often characterized by continuous trading with real-time price updates. This means they are subject to market fluctuations.
It’s not always the case, but public investments tend to be more liquid and have shorter investment horizons when compared to some private investments.
Conversely, private investments involve trading assets not widely available on public exchanges and markets. Private investments tend to be less influenced by daily market fluctuations1 as they are not traded on open exchanges—although all investments are subject to market fluctuations—and tend to offer investors a more active role in the decision-making of the underlying assets. However, some of them, like real estate and precious metals, come with potentially longer investment horizons than their publicly traded counterparts.
Ultimately, the ability to invest in private investment options, such as real estate, is a massive point in a self-directed IRA’s favor because you open the door to additional possibilities and can still typically invest in public investments.
Canyon View Capital Offers Products for Self-Directed IRAs That Can Require Less Hands-On Time
At Canyon View Capital, we understand that investing can be intimidating. While self-directed IRA private investments can open the doors to many additional investment opportunities, they also come with an increased burden on the investor.
For investors who want to enjoy the potential benefits of assets like real estate from a self-directed IRA, CVC offers investment products that can assist.
With over 40 years of experience between CVC principals and a portfolio of multifamily real estate now valued at over $1 billion, we provide options to investors like you to target savings for retirement.
Still need more information on the IRA Alternative Investments?
For over 40 years, CVC has managed, owned, and operated real estate valued at over $1B2. Our buy-and-hold strategy, concentrated in America’s heartland, is designed to provide consistent investment returns. To learn more about self-directed IRA private investments, call CVC today! Get Started
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Eric Fisher, Chief of Staff
Eric joined Canyon View Capital in August 2021 with 15 years of hotel management experience grounded evenly between Property & Corporate Operations, and Business Development & Acquisitions. After $500M+ in hotel acquisitions, Eric uses his nuanced understanding of the acquisitions and transitions processes to support CVC real estate investments. His professional versatility makes Eric an invaluable resource for the President and Executive Team in all business functions, including Investments, Operations, and Strategy.