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Dispelling Self-Directed IRA Risks

Self-Directed IRA Risks

We want all our clients to make as much money as possible. It’s not a zero-sum game. All IRA Financial clients could have millions of dollars in their IRA. There are no limitations. The only limitation is you. So you have to know the risks and rewards. In this video, we will focus on dispelling Self-Directed IRA risks.

Are Self-Directed IRAs Risky?

What are the risks of a Self-Directed IRA? The first is obviously fraud. You invest in your neighbor’s funds, and it turns out your neighbor was a bad actor, and he or she took the money and ran. So obviously, when you buy stock, whether it’s Apple, Tesla, or even Silicon Valley Bank, no investment has zero risk. The SEC would want you to think that there are fewer risks involved in publicly traded securities because they’re regulating it, auditing it, there’s quarterly reports, there’s disclosures. But that’s not always the case, as we know from Lehman Brothers, Bear Stearns, Silicon Valley Bank, and Enron. Not hundreds, if not thousands of other small-cap companies have had fraudulent issues. The Department of Justice recently sued Apple. There are risks everywhere. But the nice thing with the Self-Directed IRA is the risks on you because you’re in control of money. So, you always have to do your diligence.

No matter if you’re buying Apple stock or if you’re investing in a small, privately held fund, due diligence. Can you assume the risk? If you don’t want to take risks, you probably shouldn’t buy altcoins. Maybe you should be buying fixed income or municipal bonds or other things that are a little bit more secure and stable. But that is the beauty of America. The beauty of the Self-Directed industry is that it’s up to you, not up to the government what you can and cannot do. It’s up to you. The IRS says there are only three things you can’t do with an IRA: life insurance, collectibles like art, and any transaction that involves yourself personally or your lineal descendants, your parents, your children, spouse, daughter-in-law, son-in-law, or any entity is controlled by such persons, you can’t transact with. Otherwise, you can do it. Whether it’s real estate or cryptos or gold, investment funds, credit funds, hard money loans, real estate funds, or founder stock, you can do it. It’s all up to you. You must know yourself and know what you want and do not want in terms of risk factors in your entire account.

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To conclude, is doing a Self-Directed IRA risky? No. The IRS has no audit rules specific to Self-Directed IRAs. Schwab says they have a Self-Directed IRA. It’s not a true Self-Directed IRA. They won’t let you do alternative asset investments they don’t sell. But as long as you’re not violating the prohibitive transaction rules, doing life insurance or collectibles, you can do it. Now, whether your investment turns out positive or negative, that’s up to you. And that is the beauty of America, right? You have to take charge of your own future. So you have to know yourself, you have to do your diligence, analyze risk versus reward, and then you can make the determination whether that investment is too risky or is an appropriate and suitable investment for your IRA.

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That’s it for today’s video. Hope you enjoyed it. If you have questions about Self-Directed IRAs, risks, investments, or structuring, give us a call. We have an incredible team of tax specialists who would love to assist you. If you want to learn more about what you can and cannot do with a Self-Directed IRA, check out the thousands of videos I’ve done, podcasts, or blogs. You can check it out all on our website at You can get started by doing a quick account set up or simply download our app. So thanks again for watching and I look forward to seeing everyone, yeah all of you, on the next video. Thanks.

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