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Self-Directed IRA Mistakes


Despite the current economic downturn, it is always a good idea to plan for what will happen in the future. One way you can do this is by investing in a Self-Directed IRA retirement account. These accounts are popular because they allow you to invest your money in almost anything of your choosing rather than being limited to just stocks and bonds. However, there are some things that people often do that may be hurting their Self-Directed IRA more than helping it. Here are eight of them

1. Investing Too Aggressively:

When people first open an account, many decide that they want their investment portfolio to grow quickly. While you may see some gains on an investment, that doesn’t mean there is no risk. You also need to realize that no matter how much this account grows, it still must be used for your retirement needs when the time comes. Using it for anything else can result in penalties and fines.

2. Not Keeping Up With Maintenance:

Just like any other investment account, your Self-Directed IRA needs to be regularly monitored. This means checking to make sure the investments you have made are still in line with your goals and that the account is still performing as expected. If not, you may need to rebalance your portfolio or make other changes. Maintenance is also making sure you’re in compliance every year.

3. Not Having a Plan:

One of the biggest mistakes people make with Self-Directed IRAs is not having a plan. This means knowing what you want to invest in, how much risk you are willing to take, and when you plan to retire. Without this information, it will be difficult to know whether you are making the right investment decisions.

4. Not Researching Investments:

Another mistake people make is not researching their investments. This is especially important when investing in something outside of the traditional stock and bond market. Make sure you know everything there is to know about the investment before putting your money into it.

5. Withdrawing Money too Soon:

One of the remarkable things about a Self-Directed IRA is that you can withdraw money at any time without penalty. However, this should only be done if it is necessary. Remember, the goal is to use this account for retirement and not to get quick access to your money.

6. Not Keeping Records:

To make sure you receive the maximum benefits of a Self-Directed IRA, you need to keep complete records. This includes holding on to any documents that confirm or deny your investments, receipts for the taxes you pay, and copies of all the account statements. This information can be used to prevent you from missing out on deductions or being audited.

7. Claiming social security before the age of 60:

One of the benefits of a Self-Directed IRA is that you can delay claiming social security benefits. If you begin claiming them before the age of 60, you could be reducing the amount of money you receive each month. Instead, wait until you reach retirement age to claim them and then use the Self-Directed IRA to supplement your income.

8. Not Seeking Expert Advice:

If you don’t know what to do with your Self-Directed IRA or would like to learn more about investments, seek expert help. While you may think you know what you are doing, it is always helpful to get a second opinion from an expert who has experience with this type of account and investment. They can help you make better decisions and help you make the most of your Self-Directed IRA.

9. Not Understanding Fees

Some Self-Directed IRA providers will charge you asset valuation fees. This means that as your portfolio grows, the cost of sustaining your Self-Directed IRA will increase. Hence, it is extremely important to work with a provider that charges flat fees, like IRA Financial.

By avoiding these eight mistakes, you can plant your Self-Directed IRA wisely, so it will grow and work the way that you want it to. When used properly, these accounts can be a great asset for anyone who is planning their retirement.


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