It is estimated that there are over 1 trillion U.S. dollars in IRA funds nationwide. That is a lot individuals voting with their money, especially when the average Roth IRA contribution for 2011 was 3,335 dollars. Using a self directed IRA, a contributor can make decisions that reflect their savings goals.
There is a lot of flexibility in a self direct IRA, since the IRS only excludes investing in S corps, life insurance and collectibles. Many self directed 401 ks are used to invest in the traditional stocks, bonds and mutual funds, but some choose to invest in real estate IRA funds or plans, and other alternative financial vehicles.
Understanding the self directed IRA rules will allow you to invest in a multitude of different things that can bring substantial returns if managed properly. For example, many investors choose real estate since it can provide monthly returns and liquid assets. The real estate IRA rules just excludes property that you live in, or would be used by yourself and a spouse essentially. Your real estate IRA custodian can help you navigate the intricacies of purchasing rental properties with your IRS IRA contribution limits.
In addition to traditional investing, you can use IRA checkbooks to directly purchase investments for your self directed IRA. In fact, some investors choose to purchase small businesses with their self direct IRA funds. While this can be a risky proposition, it provides the ability to grow their investment considerably with a solid monthly return.
Depending on the type of business you choose to invest in with your self direct IRA funds, you may be able to manage a working business, or you may have to grow a new business venture. Your level of risk will dictate how you decide to invest your funds and what level of operational overhead you are comfortable undertaking. However you decide to invest your IRA capital, proper due diligence can help you eliminate ample risk and affording you future wealth.