Your IRA Can Do More Than You Think

Did you know your IRA could invest in alternative assets and not just Wall Street? As of 2024, there are more than $15 trillion in Individual Retirement Accounts (IRAs). These accounts can own real estate, private funds, small businesses, start-ups, crypto, and more—allowing true diversification beyond the stock market.

Self-Direct Your Traditional IRA, Roth IRA, SEP IRA, and Inherited IRA
Invest in Real Estate, Crypto, Private Funds, Promissory Notes, Venture Capital, Private Equity, Hedge Funds, Precious Metals, Private Lending, and more
Tax-Deferred or Tax-Free Growth in a Diversified Portfolio
IRA Must Be Set Up With an SDIRA Custodian

The Truth About IRAs

When most people think about IRAs, they picture stocks, bonds, and mutual funds—the staples of traditional investment accounts. What they don’t realize is that the IRS doesn’t limit your IRA to those traditional assets. Instead, retirement accounts like Traditional and Roth IRAs have far greater flexibility, allowing you to invest in alternative assets such as real estate, cryptocurrency, promissory notes, private funds, and precious metals. You can even be a private lender with your your IRA!

Why doesn’t everyone know this? The answer lies in how traditional financial institutions operate. Major banks and brokerage firms like Fidelity and Vanguard are designed to limit an IRA’s investment options to publicly traded assets like stocks, bonds, and mutual funds. Partnerships with mutual fund providers who charge expense ratios allow a brokerage firm to collect a share of the fees for including the funds in their offerings.

In other words, brokerage IRA custodians generate revenue through the sale and management of traditional investment products. Allowing investments in alternative assets like real estate conflict with their business model and requires significantly more administrative effort by the custodian.

If you’d like to invest your IRA outside of Wall Street, you’ll need to set up an IRA with a custodian who offers Self-Directed IRAs. These accounts follow the same rules and regulations as brokerage IRAs while providing the flexibility to invest in a wider range of assets. Download a free copy of the #1 book on self-directing, The Self-Directed IRA Handbook.

What Can an IRA Invest in?

Self-Directed IRA custodians like Directed IRA allow investments in any asset allowed by law. In fact, Directed IRA does not sell investments of any kind. As the owner of a Self-Directed IRA, you’ll have the freedom to find and invest in whatever you’d like. Your IRA provider simply acts as a custodian of your account—facilitating, processing, and securing the investments you choose.  

The following are common investments held inside of Self-Directed IRAs.

Real Estate

Checkbook IRA LLC

Private Funds & PPMs

Crypto & Bitcoin

Promissory Notes & Private Lending

Venture & Startups

Precious Metals

Mutual Funds, ETFs, Stocks

Brokerage Account

Open a Self-Directed IRA

Open an Account

Open an account with a self-directed IRA custodian like Directed IRA in as little as 5 minutes.

Fund an Account

Fund your account by making a new contribution or by rolling/ transferring funds from another retirement account to Directed IRA.

Make an Investment

Invest your account into your planned self-directed investment

Frequently Asked Questions

What investments are prohibited in my IRA?

While there’s significant freedom in what you can invest in your IRA, some assets are restricted. Here are five common investments that are prohibited by the IRS.

Collectibles: Artwork, vintage coins, cars, and similar items are prohibited.
Life Insurance Policies: These cannot be held in an IRA.
S-Corporation Stock: Your IRA cannot own shares in an S-Corporation.
Personal-Use Real Estate: This includes your primary home, vacation property, or any real estate used personally or by anyone who is a disqualified person to your IRA.
Prohibited Transactions: Investment transactions with “disqualified persons,” like your spouse, parents, or children, are not allowed.

Why are Alternative Assets popular?

Diversification: Reduce reliance on volatile markets by spreading your investments across various industries and assets.
Growth Potential: More options mean more opportunities to outpace traditional market returns.
Tangible Assets: Assets like real estate and precious metals offer tangible, physical value that doesn’t depend entirely on market sentiment.
Personal Expertise: Do you have a background in real estate, tech startups, or crypto? With an SDIRA, you can invest in what you know best making it easier to invest with confidence.

Can I self-direct my 401(k), HSA, or Coverdell ESA?

Alternative investments aren’t just for IRAs. With the right custodian and account setup, you can also self-direct the following accounts:

Health Savings Accounts (HSAs): A tax-advantaged savings account designed to help individuals with high-deductible health plans (HDHPs) save for medical expenses. Funds contributed to an HSA are tax-free, can grow tax-free, and can be used tax-free for qualified medical expenses. Learn more.

Education Savings Accounts (ESAs): Specialized accounts that allow parents to use funds for various educational expenses, such as tuition, textbooks, tutoring, and other approved costs, giving families more flexibility in tailoring their child’s education. Learn more.

Solo 401(k)s: Designed for self-employed individuals or business owners with no employees (apart from a spouse). It offers high contribution limits and tax benefits, combining features of traditional 401(k)s and IRAs. Learn more.

View all account types.

Can I transfer funds from my existing IRA or 401(k) into my Self-Directed IRA?

Yes, you can transfer funds from your existing IRA or 401(k) into a Self-Directed IRA. This can typically be done through a direct rollover or transfer, allowing you to move your retirement funds without incurring taxes or penalties, as long as the process is completed correctly. Visit our Fund Account page to learn more.

Cash or In-Kind Transfer: This method involves moving funds or assets directly from an existing IRA to a new Self-Directed IRA (SDIRA). A cash transfer means liquidating the assets in the original account and transferring the cash value, while an in-kind transfer allows you to move existing assets, such as stocks or real estate, directly into the new account without selling them.

Rollover from a 401(k) or Other Employer Plan: This option lets you transfer funds from an employer-sponsored retirement plan, like a 401(k), into your new SDIRA. The process typically involves a direct rolloverwhere the funds are sent straight to the new self-directed IRA account. A direct rollover isn’t taxable and there is no penalty. There is also an option for a 60 day rollover where the account owner receives the funds themselves personally and has to re-deposit within 60 days or the funds are deemed distributed. You can only do one 60 day rollover every 12 months and the rules can be tricky. As a result, when rolling over funds from a 401(k), 403(b) or other employer plan to a self-directed IRA, it is best to do a direct rollover where the funds are sent directly to the self-directed IRA custodian (Directed IRA) by ach, wire, or check.

What is the difference between a Self-Directed IRA and a Standard Brokerage IRA?

Investment Options: When you own a IRA at a brokerage firm, your options for investing are limited to publicly available assets like stocks, bonds, and mutual funds. Those same assets are available in an SDIRA, but with limitations removed so you can also take advantage of “alts” like real estate, promissory notes, and private funds.

Control Over Investments: With a standard brokerage IRA, your custodian or financial institution limits your investment options. An SDIRA puts you in the driver’s seat, allowing you to call the shots and to invest in publicly traded assets and private assets like real estate or private companies. This process is called “self-directing” a retirement account.

SDIRA Investment Examples: Purchasing a residential or commercial rental property, holding equity in a private company or private fund, investing in a crowdfunding offering, or venture capital funds, securing income streams through private lending or promissory notes.