A self-directed investment is a retirement account in which the investor is responsible for all the decisions. The individual who holds the account makes decisions based on his/her own choices. People use this account as a means of diversifying investments apart from stocks, bonds, and mutual funds. The investments in this account are administered by a custodian or trustee who is appointed by the investor himself/herself.
The greatest advantage for a self-directed IRA is that; a person can invest in whatever he wants. These investment decisions may range from gold coins to horse farms (Tuchman, 2013). However, people have misunderstood the meaning of self-directed IRA’s and often filled them with volatile high-risk investments. Individuals who manage self-directed IRA’s should know the correct management of these accounts. An ideal use of these accounts would be to fill them with low-value company stock or long-term inflation hedges. Investing in low-fee accounts may not be as exciting as investments made in a horse farm or gold coins. But deferring tax in the long run will have a compound effect on the investor’s money over the years. This is a simple and safe method for investments if people do not go over board by taking advantage of this investment account.
With the awareness about ways of investing increasing in the digital age, it has become possible for self-directed investors to make decisions that were once made by professionals. There is sufficient data available that can be a guide towards investing in high probability option trades. If a person is able to manage the resources in which he invests he may ultimately benefit a great deal from the investments made today.
Works Cited
Tuchman, Mitch. "Safe Self-Directed IRAs For Retirement Investors." Forbes. Forbes Magazine, 28 May 2013. Web. 26 Feb. 2014. <http://www.forbes.com/sites/mitchelltuchman/2013/05/28/safe-self-directed-iras-for-retirement-investors/>.
