What You Need to Know About Self-Directed IRAs

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What You Need to Know About Self-Directed IRAs

Retirement doesn’t have to be uncertain. You can take matters into your own hands early on with certain IRAs that are available to you. For instance, self-directed IRAs can help you to expand your retirement options by investing in other assets outside of stocks and bonds. If you are interested, here’s what you need to know about self-directed IRAs.

What Is a Self-Directed IRA? 

Firstly, you should have an idea of what a self-directed IRA is before you consider opening an account. A self-directed IRA allows the account owner to make investments for their retirement plan. Therefore, all the investment decisions lie with the owner. This kind of freedom has an appeal for many, which is why you might find it a good option for you.


There are many investments you can make with a self-directed IRA, but there are some limitations as well. One main reason why people go with self-directed IRAs is that it allows you to invest in various assets you may have access to. Some of these investments include: 

  • Commercial and residential real estate 
  • Oil-gas-energy 
  • Undeveloped or raw land 
  • Cryptocurrency 
  • Private stock offerings 
  • Gold and other valuable metals 

To avoid a situation in which your IRA account will be distributed to you, there are some investments you should know that the IRS doesn’t allow. These investments cannot be made using your IRA by the account holder, their spouse, or anyone within their lineage, as well as fiduciaries and individuals who provide services to your IRA. Here are some of the investments that are prohibited transactions for a self-directed IRA:

  • Life insurance
  • Collectibles
  • Cars 
  • Guns 
  • Wine 
  • Paintings 


A self-directed IRA comes with many advantages, such as receiving tax breaks on your assets’ earnings. Another major benefit of self-directed IRAs is that you have the freedom to explore areas that you are interested in without any suggestions from the IRA. Self-directed IRAs also make room for more diversification and will allow you to put funds into other investments, while they also offer you extra protection from potential losses.

Potential Risks 

With self-directed IRAs, there are also some risks you need to be aware of. We previously mentioned investments that the IRS prohibits, but there are also risks you can face. For example, other prohibited transactions can include self-dealing, fees, not having liquidity, fraud, a concentrated portfolio, and more. That’s why it’s so important to educate yourself on self-directed IRAs before you invest in them.


Hopefully, our guide on what you need to need to know about self-directed IRAs has helped you in some way. With the assistance of self-directed IRA services, you can have a company hold your funds, improve your overall investing experience, and make your eventual retirement life a reality.

Self-directed IRAs can be a smart option for your retirement because they allow you to invest freely in certain things that you couldn’t otherwise. Regardless of whether you decide to invest with self-directed IRAs, it’s never too early to start thinking about retirement.