Self Directed Iras

Written by Genevieve Hawkins
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As people look into new investment options, many are turning to these types of retirement funds and seeing what this money can do for them. Self directed IRAs (Individual Retirement Accounts) allow for greater freedom and flexibility with funds than traditional IRAs. Additionally, with no tax on the income, many people are finding this investment tool very useful.

How Does an IRA Work?

First, it is best to get some background information. The federal government set up provisions for people to put aside money for retirement in individual accounts--these have been in place for several decades. There are certain restrictions regarding what can be done with these funds, but as long as they are going into "safe" investments and the money is remaining in the original account, there is some flexibility in terms of moving this money around. With so many aging baby boomers looking at retirement in the not-too-distant future, they would like more money to be available for them when they reach that stage.

Generally, a self directed IRA offers control to the account holder for what happens to the money, which is usually pooled in a bank or other insured place for investment opportunities. Because it does not accumulate interest until the money is withdrawn, there are many advantages to using IRAs for investing. Furthermore, the money can be used for stocks, bonds, covered options, and mutual funds, as well as certain types of real estate.

Overall, a self directed IRA can be a great way to maximize your investment potential, but because they are so difficult to understand, there are many legalities and red tape to unwind. The best first step is to find a corporation that will cover the money, and see what they can do. From there, see what you can and cannot do with your retirement funds.


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