Self-directed IRAs: Don’t Fall in Love on the Rebound!
Estimated reading time: 2 minutes 50 seconds
Like a spurned lover, investors are becoming disenchanted with the stock market. The ups and downs of a once placid relationship has become too much to handle. They want to fall in love again with a more stable partner. A self-directed IRA seems like a good bet. But is it? Will you regret the relationship down the road?
How to tell you might be acting on the ‘rebound’:
1) You take all of your money out of the market and put it into a single, self-directed IRA investment (such as, for example, rental income property). This removes diversification from your portfolio. Paraphrasing Warren Buffett, this is OK if you truly understand what you are investing in. But do you? Otherwise, it may make sense to diversify across a number of unrelated investments.
2) Why are you doing this now? Why not six months ago, or a year ago? Is this a spur-of-the-moment decision, or have you been thinking about this for some time now? It may be that you can reconcile your differences with your stock market “partner” and decide to stay in the relationship?
3) OK, so you want out of the market. Why not “play the field” for a while, date a number of would-be suitors, then make a decision? Self-directed IRAs can be placed into such diverse investments as real estate, promissory notes, tax liens, private placements, crowdfunding opportunities (you can really play the field here), and precious metals (to name just a few)
4) Have you talked this over with a trusted confidant? This includes financial advisors, tax accountants, tax attorneys, and yes, even professional coaches. You want to be in the proper MINDSET and give thoughtful consideration into what you are doing with a self-directed IRA, and why. Note: This isn’t an excuse to spend time kicking the can down the road. Talking to a confidant doesn’t need to be a long process.
5) Have you done your due diligence? These days, with social media dating becoming more of the norm, people go to background-checking websites to assure themselves that there are no hidden skeletons before accepting that first meeting date. The same is true of an investment. You want to avoid “The Money Pit”, and the best way to do this is through thoughtful due diligence ahead of time (note: The Entrust Group has a due diligence piece available)
In summary, a self-directed can be a great lifelong partner…. So take the time needed to have an effective courtship!
About the author
Jason Dukes is a Life Coach and an innovator in personal transformation. As the Founder and CEO of Captains Chair Coaching, Jason focuses on bringing peace to the world by helping people embrace their Gift and Give It To the World. Jason does this by one-on-one coaching, group coaching, public speaking, his social media presence, and his Give Your Gift To the World Book and Seminars. Jason is also the producer of the Uncovering Ourselves Conference Series and Radio Program. Jason has spoken at many conferences including the AgileIndy Conference and is published in many media outlets, such as Forbes.com. Further information on Jason and his services can be found at www.captains-chair.com
This article is not to be taken as financial advice. Jason Dukes is not a financial advisor.