When investing in a self-directed IRA, one of the benefits is the multitude of investment options. Traditional and Roth IRAs allow investments in stocks, bonds and currency, but the variety stops there.

When doing your due diligence in selecting the IRA funds that are right for you, versatility is a good place to start. The following is only a fraction – but most popular – of the many alternative asset options available through the SDIRA that can grow your nest egg for a comfortable retirement.

Real Estate Investments

When investing in a self-directed IRA, the most popular alternative option is the real estate market. The variety within a real estate investment can open many doors, and allow for maximum equity to build. Property purchased in a SDIRA can have the mortgage placed against the property, allowing for a lower cash total needed for purchase.

Investors can extend the marker to non-traditional assets such as multi-unit homes, apartment buildings, commercial property, improved or unimproved land, and more. Account holders can also use business investments, including partnerships, joint ventures, and private stock.

All of these investment options are owned by your IRA. Because of this, all income from the property, permissible contributions, and other assets belong to the IRA. Overtime, these investments will allow your SDIRA to grow, provided you keep within the purchase agreement and maintain your assets.

Precious Metals

Another lucrative investment could be found in precious metals. Particular metals are considered rare and can have high economic value. Gold, silver, platinum and palladium in their solid form are acceptable alternative assets due to their market value.

Usually kept in bars and coins, these metals are great investments due to their positive economic growth, their balanced market and they remain largely unaffected by rising rates. While gold and silver are the most popular and attainable precious metals, it’s important to invest based on market value. A secure market makes precious metals a valuable investment.

Private Placements and LLCs

Another alternative investment allowed by self-directed IRAs involves investment in companies and small businesses. Investing in company stock is beneficial not only for the account holder, but for the business they invest in. While institutions grow, so do your SDIRAs, making the situation a win-win. There are various ways to provide private loans to these ventures. These private investments involve stocks, shares of common or preferred stock, warrants, or promissory notes.

Of course, when considering this investment, or any alternative asset involving commercial real estate, it may be wise to use an LLC or a limited liability company. This asset provides liability protection and gives the owner “checkbook control” – or the ability to sign over authority of your funds. While owners don’t have to create an LLC, it does give investors quick access to their IRA in order to react swiftly in the ever-changing market.

Secured or Unsecured Notes, Trust Deeds, and Mortgages

Secured or unsecured notes are both viable alternative investment sources. Whether you have a deed of trust backed with collateral, or something at higher risk, it is possible to use either as secured option. These can be purchased through brokers or private parties. While trust deeds, mortgage notes, or other interest-bearing notes are largely the same, each must have proper instruction before they are a viable source.

While notes are an applicable alternative to traditional investment, the risk is in the intangible state of the agreement. Any promissory note is a viable option, however it’s important to have borrowers and trustees accounted for before making a complete investment. Mortgage loans, however, are loans secured by property and contain actual evidence of existence. Either investment could have a substantial pay-off, but it’s important to invest wisely when using this method.

Other Alternative Investments

Self-directed IRAs have a variety of investment options to fit any retirement plan. While the list above contains only a fraction of the alternative investments allowed, it’s imperative to have a trusted IRA custodian for all of your retirement funds. The key to a successful self-directed IRA is knowing what alternative assets are available to you. With due diligence and knowledge of investment advice, SDIRAs could be the key to comfortable living into your golden years.