Getting Started with a Self-Directed 401(k)
You’ve likely heard of Roth and IRA retirement accounts, but did you know that you can also open your own self-directed 401(k)? This puts you in far greater control of how and what you invest in, but there are some caveats to keep in mind.
The most important thing to watch for is that many companies claim to offer self-directed 401(k) accounts, but they limit your options as to what you can invest in. This is not a true self-directed 401(k). A true self-directed 401(k) gives you complete control of your funds without the need to get “permission” from your financial institution. With a self-directed 401(k), you and only you are in complete control.
What Can I Invest in with a Self-Directed 401(k)?
You may be surprised at the sheer amount of opportunities available with a self-directed 401(k). With one, you can invest in items that generate better returns such as trust deeds, mortgages and mortgage pools as well as private notes and loans?
You can also roll your existing retirement account into a self-directed account. The types of accounts that can be turned into a self-directed 401(k) include:
- Traditional IRAs
- Roth IRAs
- Sep IRAs
- 403(k)
- 401(k)
- Profit-sharing plans
- Keoghs
- Qualified annuities
- Money purchase plans
- Coverdell Education Savings
- Government Eligible Deferred Compensation Plans
Why Haven’t I Heard of This Before?
If this is the first time you’re hearing about self-directed 401(k)s, you’re not alone. It’s simply not a well-known option. Many people mistakenly understand that the only way to invest one’s retirement savings is in the stock market. Nothing could be further from the truth.
Of course, stock brokers are only interested in your investing in stocks, otherwise they wouldn’t make a commission. 97% of all retirement accounts have been invested in the stock market for decades, and have made a comfortable living off of it. Why would they stop now?
Stock brokers, unfortunately, do not owe it to you to tell you about the alternatives to investing in the stock market. It is up to you to educate yourself and inform yourself of the options available.
Many people are seeing the rampant corruption, corporate scandals and insider trading that happens in the stock market, and are funneling their retirement savings toward a potentially more lucrative investment that is both finite and profitable – real estate.
If you’d like to learn more about investing in real estate, including trust deeds and mortgages, with your self-directed 401(k), our professionals would be happy to answer any questions you may have. Simply give us a call and we’d be glad to walk you through the process and show you how to get started. It’s both easy and rewarding – and having control of your retirement account means having control of your financial future.
Related Information: IRA Investing | Foreign Investors