December 4, 2013

Top 5 Myths About Self-Directed IRAs

Jon Galane
5 min

Are you looking for ways to supercharge your retirement savings and build lasting wealth?

If so, you might be intrigued by the concept of self-directed IRAs. These unique retirement accounts offer a wide range of investment choices beyond the traditional stocks and bonds, but many people remain skeptical or unaware of their potential.

In this article, we'll dispel common misconceptions surrounding self-directed IRAs and shed light on the exceptional opportunities they present for securing your financial future. Whether you're a seasoned investor or just starting, read on to learn how Mountain West IRA can guide you through the simple setup process and help you leverage the vast possibilities of self-directed retirement plans.

First, they’re difficult to set up—while it might be difficult to navigate the process entirely on your own, setting up a self-directed IRA with Mountain West IRA is simple. When you open your account with us, our step-by-step process provides you with a blueprint to open, fund, and complete self-directed IRA investment transactions quickly, safely, and accurately.

Second, there are plenty of investment choices within a standard IRA—unless you’re content to stick with stocks and bonds, a standard IRA just isn’t going to cut it. Traditional approaches to retirement investing lead many otherwise savvy investors to overlook one of the most lucrative wealth-building strategies available. With the great tax advantages provided by a self-directed IRA or 401(k), as well as the wider range of possible investments, you can potentially build wealth and secure your future much more effectively than you can through traditional plans.

Third, my (CPA/attorney/broker/friend/other person) said that buying and selling real estate in my self-directed retirement plan was illegal—this has been a long-lived myth. Neither the IRS nor the Department of Labor has ever published a list of legal investments. However, there is a list of Prohibited Transactions and Disqualified Persons that deal with what is not permitted. Real estate and other investments are permitted provided you follow the rules.

Fourth, signing up for a self-directed IRA with a firm means that they can do whatever they want with my money—as a custodian, we don’t handle your money. Rather, we show you how to take advantage of self-directed retirement plans. All the funds not invested are held for your benefit in our 100% FDIC-insured custodial bank account at Sterling Bank.

Fifth, many people I’ve spoken to have never heard of a self-directed IRA and have told me it’s probably a scam—it’s a common misconception that the only investments allowed in a retirement account are stocks, CD’s, and mutual funds. The truth is that broader allowable investments have been available to the public since the inception of the IRA in 1975

The self-directed IRA industry is growing very strong with trillions of dollars invested in IRAs containing non-traditional assets.  There are over 50 million retirement account holders, and less than 4% of those are held in non-traditional assets. This number is expected to grow significantly over the next five years as more individuals and their financial advisors attain a greater awareness of self-directed IRAs.

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