The Economy Its Impact on the Self-Managed IRA Directed Into Real Estate First and foremost, let’s analyze how IRAs fare as an investment in the real estate domain. Traditionally, the majority of well known financial institutions that act as custodians for IRAs mostly restrict investments into a limited corral of options such as publicly traded stocks, bonds, mutual funds and CDs. Whereas a self-managed IRA offers a wider diversified investment potential, a self-managed IRA allows the owner of the account to personally self direct the retirement account into a wider array of alternative investment options. With a self-managed IRA, the retirement holder can purchase and hold investment real estate within their retirement portfolio. Although, the purchase of real estate inside an IRA is generally not considered a traditional investment option for most IRA holders, this trend is changing. If an account is properly structured, then tax court also allows for a form of self-directed managed IRA dubbed as the checkbook IRA. Using the self-directed IRA with check writing privileges, the retirement investor can have more autonomy as to where their retirement funds are invested while simultaneously saving time and money. When an investor has checkbook writing rights for their IRA account, they can simply write checks from their account on any transaction related to the investment without having to wait for a custodian to administer the checks on their behalf. Caveat emptor. Make sure that you know the rules regarding IRAs and seek professional help regarding self directed IRAs before converting an IRA and making alternative investments, otherwise even an unintentional mistake can be costly. Feasibility of Alternative Investments Alternative investments are finding a major route towards real estate. This can be seen from the behavior of groups like Fidelity Investments, a mutual fund giant. It is collaborating for an alternative fund owned by the Blackstone Group (NYSE: BX [FREE Stock Trend Analysis]), the largest investor in hedge funds. The investments are being targeted towards real estate and with solid backing, investors are positive to chip in. The alternative stock of long/short equity has fared well when checked with the S&P 500 benchmark. The figure of alternative funds added to the market from January till July 2013 amounts to $59 billion, which shows that it is the fastest growing mutual category. (Source: http://www.morningstar.com/Cover/Funds.aspx) The feasibility can be understood from the fact that last year, alternative investments into areas like real estate and elsewhere amounted to $25.6 billion. The reason is that currently the interest rates are pretty low, so this area provides attractive yields. Then there is also the fact that investors are also attempting to diversify away from securities that have suffered a financial crisis. Securities firms have also been in the news after William Galvin, Massachusetts Secretary of the Commonwealth, subpoenaed 15 firms for their sales practices with the senior population. Nontraditional investments in real estate do have their risks, but currently they maybe in a better position to perform.]]>
