By Andy Ives
The term “self-directed IRA” can be confusing, given that account owners choose whichever stock or mutual fund they want to buy within their IRA, and how much to purchase and how much to sell.
A better term for a self-directed IRA might be “non-traditional investment IRA.” A self-directed IRA is like an exotic grocery store where you can find unconventional foods and ingredients. Privately held start-up companies? Aisle 3 in the exotic grocery store. Rental properties? Aisle 6. Cryptocurrency? Aisle 10.
These items are just a few of the non-traditional investments you can own within a self-directed IRA.
“Self-directed” also carries the implication that the responsibility to correctly manage the IRA falls on the account owner. A self-directed custodian will be less “hands on” than a standard IRA custodian.
For example, if a client wants to invest in a racehorse within a self-directed IRA, they can do so, but the custodian…