How Does a Self Directed IRA Help You Make Real Estate Investments?

Beginner investors are always given the same advice by experts – Diversify your portfolio to save for retirement, with investments in real estate and other fixed assets as well as stocks, bonds and other higher-risk ventures. This goal becomes easier to attain with a self directed IRA, which allows you to expand your investment horizon tremendously.

When you’re young, you can take a few more risks than you will be able to later in life, and self directed or SD-IRAs allow you that freedom. Real estate investments can be somewhat risky, but you can afford to play the market when you’re starting out, especially with a bit of planning and forethought.

Why Invest in Real Estate with an SD-IRA?

Any savvy investor knows that owning residential, commercial or retail properties is a great way to boost your portfolio. While real estate does fluctuate from time to time, it’s still practically guaranteed to offer significant returns over the long term.

Of course, you can also invest in rental real estate to compound your wealth further and faster. If you already own a property, invest in a second one and put the first out on rental for even greater profits. Real estate is (and always has been) one of the most effective ways to increase wealth over your lifetime, so it should definitely be at the top of your list.

Self directed IRAs offer the ideal solution for beginners looking to invest in real estate, since you can make your own choices with very little restriction. Despite common belief to the contrary, they are not very complicated to deal with, even for beginners!

Make a Wise Decision while Picking a Self Directed IRA

Not every SD-IRA will allow you to make investments in real estate, so it’s a good idea to look into this option before you pick one. Picking the right custodian for your IRA is also as important as picking the right account type, since they can help you invest IRA in alternative assets of your choosing.

Also, remember that your self directed IRA cannot be used for self-dealing, i.e. buying land or property for you (the owner) or your family members to reside in, or as part of business dealings.

Self Directed IRAs Help You Invest for Retirement

With employer-provided 401Ks and other retirement plans, you do not have the freedom to choose where your funds will be invested, which reduces your control over the returns. Investing your savings in property now will add up to major gains by the time you reach your golden years, thanks to the power of compounding interest.

While saving for retirement may not seem like a priority when you’re young, it’s crucial to make the right investments as soon as you can. By the time you retire, your nest egg needs to be sufficient to handle all your expenses as well as help you live in comfort!

About the author: Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He regularly writes for blogs at MoneyForLunch, Biggerpocket, SocialMediaToday, NuWireInvestor & his own blog for Self Directed Retirement Plans. If you need help and guidance with traditional or alternative investments, email him at or visit

Anum Yoon

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.

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