Title: Unlocking Retirement Potential: Self-Directed IRAs as Key to Future Wealth Building
Dive into the new year with a freshened approach to your tax and retirement planning strategies! One effective method to kickstart 2025 on a positive note is by preparing yourself for the tax advantages of an Individual Retirement Account (IRA).
Traditional IRAs feature an initial tax reduction on your contributions, allowing for a less burdensome 2024 tax bill. On the other hand, Roth IRAs call for post-tax contributions but will reward you with tax-free withdrawals once you reach retirement age. Both IRA types expand your investment returns through tax-deferred growth, delaying taxes and encouraging the upside potential of compounded growth.
Remember, you can contribute to your IRAs up until April 15, 2025. Plan wisely by considering both the amount you will be contributing and your strategy for investing it, aiming for a combination of long-term performance and impressive returns.
Ever thought about expanding your portfolio options beyond the traditional brokerage offerings of stocks, bonds and exchange-traded funds (ETFs)? A self-directed IRA is where you can venture into new, exciting territory.
Self-directed IRAs offer access to a variety of investment opportunities, including:
• Real estate• Private equity• Private credit• Venture capital• Cryptocurrencies
These alternative asset classes could significantly diversify your portfolio and shield it from stock market swings. Recent research from KKR discovered that a 40/30/30 mix of stocks, bonds, and alternative assets demonstrated higher annual returns and remarkable resilience during market downturns between 1927 and 2021. Additionally, cryptocurrencies exhibit a low correlation with stocks, potentially adding to your portfolio's overall diversification.
A self-directed IRA allows you to tap into your skills, passions, and market insight to generate even more impressive returns. More importantly, it offers you control over your investments – you're the one making the decisions, not a firm-approved set of options.
Unlocking a self-directed IRA is as straightforward as establishing an IRA at any brokerage. Initiate your search for a custodian, evaluating their pricing, reviews, and alternative investment options. Ensure they provide the assets you're interested in – many specialize in certain areas like cryptocurrencies or venture capital.
Once you find the ideal fit, open your self-directed IRA account online by supplying your name, address, and Social Security number. Additionally, create a username and password. The entire process is fast, requiring just a few minutes of your time.
Finally, fund your self-directed IRA by making contributions, transferring existing IRA funds, or rolling over 401(k) contributions. Each of these funding methods comes tax-free.
For 2025, the annual IRA contribution limit stands at $7,000 for those under 50 and $8,000 for those aged 50 and above. You may also transfer existing IRA funds or facilitate 401(k) rollovers, without incurring taxes.
Use your self-directed IRA to invest in your preferred alternative assets. Top self-directed IRA custodians offer a platform for researching and making your selections, and their customer support should be available by phone and email to help you with any questions.
Consider adding a self-directed IRA to your new year's strategy, offering the potential for enhanced diversification and greater returns from private market assets. Engage with your financial advisor to evaluate how one may fit into your retirement plan, and see whether it's a viable option for you.
Please remember that the information offered here does not substitute for expertise in investment, tax, or financial advice. Consult with a licensed professional to address your specific circumstances.
Our official group for esteemed execs in successful accounting, financial planning and wealth management firms, Financial Council, is an exclusive, invitation-only community. Curious if you qualify?
Eric Satz, a renowned expert in self-directed IRAs, emphasized the importance of diversifying one's portfolio by investing in alternative assets within these accounts. By doing so, individuals can potentially shield their investments from stock market swings and enhance overall returns.
Intrigued by the potential benefits of a self-directed IRA, Eric Satz joined Financial Council, an exclusive community for successful accounting, financial planning, and wealth management professionals. (assuming Eric Satz is a member of the Financial Council)
