Category: Self Directed IRA

In today’s volatile financial landscape, many investors are constantly seeking ways to protect their hard-earned assets. One looming concern is the unpredictable nature of inflation. As conventional assets like stocks and bonds can be heavily impacted, individuals are turning their attention towards alternative investments as a potential hedge against inflation. But are these alternative assets truly effective against the rising tide of prices? Let’s dive in.

Understanding Inflation

Before discussing the efficiency of alternative investments as a hedge against inflation, it’s crucial to understand what inflation is. In simple terms, inflation refers to the increase in prices over time, reducing the purchasing power of money. For example, a loaf of bread that costs $2 today might cost $2.50 a few years from now due to inflation.

Why Hedge Against Inflation?

The value of conventional assets, especially cash, diminishes with inflation. This means the real returns on your investments decrease, even if the nominal value seems to be rising. Hence, it becomes essential to invest in assets that at least maintain or ideally increase in real value over time.

Alternative Investments as a Hedge

When we talk about alternative investments, we’re referring to assets that aren’t traditional stocks, bonds, or cash. Examples include real estate, commodities, private equity, and much more.

Real Estate

Often cited as one of the best hedges against inflation, real estate generally appreciates over time, reflecting the increasing costs of building materials and labor.

Commodities

As raw materials, commodities like gold, oil, and metals tend to rise in value during inflationary periods. They’re tangible assets with intrinsic value, making them desirable during economic uncertainties.

Private Equity and Collectibles

While riskier, these can offer significant returns. Their value isn’t directly tied to the stock market, offering a level of protection against broader economic fluctuations.

Alternative Investments in an Individual Retirement Account (IRA)

One of the lesser-known strategies is incorporating alternative investments in an IRA. By doing this, investors not only hedge against inflation but also enjoy the tax benefits associated with retirement accounts.

However, not every IRA custodian allows for such diversification. This is where companies like Digital Trust¹ come into the picture. As a custodian for self-directed IRAs, Digital Trust empowers investors to diversify their portfolios, allowing for a broader range of asset classes, including those that can effectively act as a hedge against inflation.

Factors to Consider

While alternative investments can provide inflation protection, it’s essential to be aware of the associated risks:

1. Liquidity: Unlike stocks or bonds, some alternative assets might not be easily sold or converted into cash.
2. Volatility: While some alternative investments can be stable, others, like certain commodities or private equity, can be quite volatile.
3. Knowledge: Alternative investments often require a deeper understanding and expertise to make informed decisions.

How to Open an Account with Digital Trust

Ready to protect your financial future and hedge against inflation? Starting with Digital Trust is easy:

1. Visit the Digital Trust website.
2. Choose the type of self-directed IRA that suits your needs.
3. Follow the guided process, and our team will assist you every step of the way.

With the right strategy and a trusted partner like Digital Trust, you can effectively guard your investments against the uncertainties of inflation.

¹Digital Trust, LLC is a custodian of self-directed accounts whose role is nondiscretionary and administrative only. The accountholder must direct all investment transactions and choose the investments for the account. Digital Trust has no responsibility or involvement in selecting any investment. Please consult with your competent tax advisor and/or legal counsel.

Investors have a couple of options when they choose to put their money in an IRA: control the investment, or let someone else make choices on their behalf. The difference is in the choice of an IRA account, whether choosing a self-directed IRA or a regular traditional IRA.

Both will still defer taxes until retirement. So which type of IRA is best for the smart investor?

What is a Self-Directed IRA?

A self-directed IRA is an individual tax-sheltered retirement account. The account is held by a regulated custodian. Custodians of self-directed IRAs are not allowed to give financial advice or manage the assets in the accounts they hold. But they can

What really sets this retirement investment vehicle apart are the options available for investments. A self-directed IRA allows investors to hold alternative assets like real estate, cryptocurrencies, precious metals, stakes in non-public companies, cattle, and more. Different custodians will offer other investment vehicles, so investors with preferred assets should look for a custodian that will hold the specific asset you are interested in. There are limitations to what can be invested in, and there are rules around each type of investment.

Investors considering a self-directed IRA should understand the IRS’s rules around each retirement investment before deciding which is right for them. Some custodians, like Digital Trust, provide investors with information on different investments, but many do not. Savvy investors should be clear about the rules for a self-directed IRA account, if not, a Prohibited Transaction could take place in the account, which could lead to a complete distribution of the account as well as taxes and penalties.

What is a Regular Traditional IRA?

Regular traditional IRAs are similar in that holds the assets in the account for the investor. Regular traditional IRAs can typically invest in market-related assets like bonds, stocks, ETFs, mutual funds and certificates of deposit.

What are the Differences Between a Traditional and Self-Directed IRA?

The most significant difference between the two types of retirement accounts is what can be invested through them. In a regular traditional IRA, investors can be limited to market-related assets, and in a self-directed IRA, there is more power to invest in alternative assets.

Another difference is how much influence the custodian can have over the investment choices. While a custodian is not allowed to give financial advice for self-directed IRAs, a custodian of a regular traditional IRA may be able to pick and choose investments as they please.

Which Type of IRA is Right for Me?

Investing is a very personal choice. In a regular traditional IRA account, investors can be 100% hands-off if they don’t want the responsibility or don’t have the time to make investment decisions.

Self-directed IRAs can provide flexibility by allowing investors to be more hands-on while permitting investments in alternative assets. Investing in alternative assets can be another way to diversify a portfolio outside of the traditional finance system. Take the time to decide what is right for you.

Finding Alternative Investments for My Self-Directed IRA

Digital Trust offers a range of ways for investors to diversify retirement portfolios by considering investments in cryptocurrencies, real estate, precious metals, LLCs, and private equity. Their new investing platform offers users one of the most comprehensive ways to track, analyze, and invest in the market.

Take control of your financial future and invest in alternative assets with today.

Digital Trust, LLC is a custodian of self-directed accounts whose role is nondiscretionary and administrative only. The accountholder must direct all investment transactions and choose the investments for the account. Digital Trust has no responsibility or involvement in selecting any investment. Please consult with your competent tax advisor and/or legal counsel.

A Self-Directed IRA allows you more investment flexibility than many other retirement plans, but it is of the utmost importance that individuals adhere to self-directed IRA rules. Below, you’ll find 5 Self-Directed IRA Rules every investor should know.

Rule #1: Certain Assets are Considered Prohibited Investments

Self-Directed IRAs grant access to a world of investment opportunities away from the traditional marketplace of stocks, bonds, and mutual funds. Indeed, investors can choose from a myriad of alternatives like real estate, LLCs, timber, oil & gas, notes, precious metals, and many others. Additionally, with the emergence of Bitcoin, Ethereum, and other cryptocurrencies, investors are able to diversify into options never seen before.

The IRS only identifies a handful of assets that are prohibited within an IRA. Those items are:

• Collectibles – This includes, works of art, rugs or antiques, certain metals, gems, stamps and certain coins, alcoholic beverages, and any other tangible personal property that is a “collectible” under IRC Section 408.
• Life insurance – Per the Internal Revenue Code 408 (a)(3) for an individual retirement account, an IRA cannot invest in life insurance.
• S-Corporations – Trusts that qualify as an IRA are not eligible to be shareholders of an S-Corporation. (See Revenue Ruling 92-73)

Rule #2: IRAs Shouldn’t Interact with Disqualified Persons

Like Prohibited Investments listed above, IRAs also have rules regarding the people you may do business with. These prohibited individuals are referred to as Disqualified Persons. Engaging in direct or indirect transactions between your retirement plan and a disqualified person may cause your IRA to be disqualified, leading to potential taxes, penalties, and may include mandatory distributions from your IRA funds.

Per the IRS, the following people are considered Disqualified Persons for the purpose of your self-directed IRA:

• You, the account owner
• A beneficiary of the IRA
• Your spouse
• Your lineal ascendants
• Your lineal descendants (and their spouses)
• Plan service providers and fiduciaries (including advisors, custodians, and administrators)
• Entities (corporation, estate, partnership, etc.) in which you own at least 50% of the voting stock, directly or indirectly.
• An officer, director, or a 10% or more shareholder or partner.

While transactions involving brothers, sisters, aunts, uncles, nieces, or nephews, including in-laws, are not expressly prohibited, it’s best to use caution when engaging in business with these individuals.

For more information regarding Disqualified Persons, please refer to IRS Section 4975.

Rule #3: IRAs Should Avoid Prohibited Transactions

According to the IRS, a prohibited transaction is any improper use of your IRA by you, your beneficiary, or any disqualified person. Additionally, transacting with a Disqualified Person or committing a prohibited transaction will most likely void the tax protection of your account, which may lead to costly and serious tax consequences.

Additionally, should a prohibited transaction in connection with an IRA account occur at any time, the IRA will then be considered to have distributed all its assets to the IRA owner (at their fair market values). If the total of those values is more than the basis in the IRA, the IRA owner will have a taxable gain that should be included in his or her income.

Here are a few examples of Prohibited Transactions. You cannot use your self-directed IRA to:

• Sell, exchange, or lease, property you already own to your IRA as an investment
• Transfer IRA income, assets, or investment to a Disqualified Person
• Lend IRA money or extend IRA credit to Disqualified Person
• Supply goods, services, or facilities to Disqualified Person
• Allow fiduciaries to obtain or use the IRA’s income or investment(s) for their own interest

Lastly, per IRS regulations, you cannot have “indirect benefits” from assets owned by your self-directed IRA. For example, using a vacation home that you’ve purchased with your Self-Directed IRA is considered a prohibited transaction.

For more information regarding Prohibited Transactions, please refer to IRS Section 4975.

Rule #4: Annual Fair Market Valuations Are Typically Required

The Internal Revenue Service (IRS) requires that Self-Directed IRA Custodians/Administrators report the value of the assets in their accounts, annually.

For traditional assets it’s relatively straight forward, as investors have public exchanges to identify their asset’s value. For alternative assets where there is no easily accessible marketplace, individuals must use a Fair Market Valuation (FMV) to assign or change the value of an asset.

Valuation of the assets in your self-directed account must be provided to your IRA Custodian/Administrator on a yearly basis (typically prior to December 31st), to ensure accurate and proper tax reporting with the IRS.

Additionally, an FMV is also required when there is a taxable event, such as:

• Taking a distribution from your IRA (including “In-Kind” distributions)
• Demonstrating an asset no longer has value; or
• Converting assets held in a tax-deferred account to a post-tax account (E.g. Traditional to Roth)

In general, precious metals and publicly traded assets (stocks, bonds, etc.) typically do not require your submission of a fair market valuation because these investment values are determined by the market. However, it is helpful to contact your IRA Custodian/Administrator to verify their individual requirements.

Rule #5: Certain Account Types Have Required Minimum Distributions

For Traditional IRA holders who reach age 72, the IRS requires that those individuals begin taking distributions from their IRA. These types of distributions are referred to as Required Minimum Distributions (RMDs). Individuals with a Roth IRA are not required to take mandatory distributions from their Roth IRA.

The amount required to withdraw each year varies based on several factors, most notably account value. If you have multiple accounts, you will usually need to calculate the RMD for each separately, to determine the required amount. You may then take a full distribution from one account or take an RMD from each. The important thing to remember is that the total RMD amount across all applicable IRAs needs to be withdrawn to avoid tax consequences. It is always wise to confirm your individual needs by using the latest calculation worksheets, which can be found on the IRS website.

There are two methods of distribution from an IRA:

• Cash Distributions – When an IRA holder requests a cash amount to be distributed from the account and sent via check, ACH or wire directly into their hands.
• ‘In-kind’ Distributions – Used to distribute non-cash assets from an IRA without selling these assets. This method of distribution changes the ownership of the asset from the IRA’s name to the name of the IRA holder. This type of withdrawal is typically used for illiquid assets like real estate, promissory notes, and private placements. The Fair Market Value (FMV) of the asset is used to report to the IRS the dollar value of the distribution.

Your IRA Custodian/Administrator reports all distributions (as of December 31st of the tax year) to the IRS and the account holder using IRS Form 1099-R.

Conclusion

Being aware of the few things that aren’t allowed in your IRA is essential when it comes to protecting yourself and your account. Which is why we recommend that every investor consult with a qualified financial advisor or tax attorney before making any significant financial decision.

Whether you’re just getting started or you’ve been investing with a self-directed account for decades, it’s helpful to know the basics. If you have questions about how the Self-Directed IRA process works, our experts are here to help. Call us today at (800) 777-9878 or email us at [email protected].

Self-directed Individual Retirement Accounts (IRAs) provide investors with the opportunity to diversify their investment portfolios by investing in assets outside of traditional markets. However, knowing where to start alternative asset research can be a challenging task for many investors. While it is true that alternative assets differ significantly from stocks, prudent investors can still adopt a similar strategy when initiating their research.

How to Conduct Alternative Asset Research

To embark on your research journey, it is recommended that you begin by understanding the investments your self-directed IRA custodian will hold. Some custodians offer limited investment options, such as precious metals only, while others allow for a broader range of investment types.

Without any prior knowledge of the available products, you should start by determining how much money will be required to add a particular investment to your portfolio. For example, a multi-family housing structure will require considerably more funding compared to an ounce of gold. Therefore, it is essential to determine the amount you are willing to invest.

Afterward, you should evaluate which assets you can comfortably add to your portfolio. The Internal Revenue Service (IRS) has established guidelines for self-directed IRAs that restrict the allowable investments. However, the range of assets that you can include in your retirement portfolio extends from small businesses and startups to precious metals and cryptocurrency.

Lastly, it is crucial to delve into the fundamentals of each alternative asset you are researching. In addition to gaining a basic comprehension of each market’s historical performance, this will be a unique task for each investment you are considering.

Real Estate

If you are interested in acquiring real estate, you could start by consulting local realtors or reaching out to investment groups to receive their perspective on the market in that particular area.

Subsequently, you should consider identifying experts specializing in the specific type of real estate you are interested in purchasing and initiate contact. Following this, you could evaluate the expenses involved in acquiring and owning the property, such as taxes, maintenance, and property management, among other factors.

Precious Metals

This asset class is relatively uncomplicated due to the restrictions established by the IRS on the permissible holdings in your account.

However, for more comprehensive research, you can explore the commercial applications for the metal, future projections for its utilization, and historical price movements, including market volatility and pricing during economic upturns and downturns.

Cryptocurrencies

Conducting research on alternative assets, such as cryptocurrencies, is similar to researching stocks, albeit with a different focus. Instead of analyzing a balance sheet, you assess the project’s credibility.

You should evaluate various aspects, including the asset’s purpose, the individuals responsible for overseeing the project, the asset’s effectiveness at addressing the problems it claims to resolve, as well as its position in the market lifecycle.

Private Equity

One of the most challenging aspects of researching this asset class is the difficulty in locating the assets and determining the optimal investment method.

Nevertheless, there are several ways of adding a startup company to your portfolio, with one of the simplest being through a crowdfunding site. Typically, such sites provide access to the company’s balance sheet, historical performance, and description, among other pertinent information.

Once you find a company to invest in, you can add that asset to your portfolio through a trusted self-directed IRA custodian like Digital Trust.

What to do With Your Alternative Asset Research

It is recommended that you maintain detailed notes on your research findings to enable easy comparison of different assets and the assessment of their respective pros and cons. If you experience any difficulty locating the required information, consider seeking input from others. You can join social media groups (Twitter, Facebook, LinkedIn, and Reddit), which specialize in the asset you are interested in learning more about.

It is worth noting that a wealth of information is also available on content sites such as YouTube. However, it is always essential to exercise caution while browsing the internet, and if other members start to sound untrustworthy, consider finding a new group.

Digital Trust offers its clients the opportunity to invest in a range of assets, including cryptocurrencies, real estate, precious metals, LLCs, private equity, and more. Moreover, they are revolutionizing the customer experience by introducing faster transactions and fully mobile self-directed IRA management. Visit

Digital Trust, LLC is a custodian of self-directed accounts whose role is nondiscretionary and administrative only. The accountholder must direct all investment transactions and choose the investments for the account. Digital Trust has no responsibility or involvement in selecting any investment. Please consult with your competent tax advisor and/or legal counsel.

Self-directing with retirement funds has increased in popularity over the past few years. While they’ve been around since the ’70s, Self-Directed IRAs (SDIRA) are still considered unfamiliar by many.

While all IRAs are prohibited from a short list of investments deemed unfit by the IRS (https://www.irs.gov/retirement-plans/retirement-plan-investments-faqs), Self-Directed IRAs open a world of opportunity-from alternative assets like Real Estate, LLCs, and Precious Metals, to digital assets like Bitcoin, Ethereum, and other cryptocurrencies.

Self-Directed IRAs put you, the individual, in the driver’s seat. While SDIRA custodians cannot give you financial or investment advice, a reputable custodian should be able to provide you with educational materials or next steps on where and how to start your due diligence.

For example, your custodian isn’t going to be able to tell you which piece of rental real estate will make enough money for your retirement. However, they should be able to help you determine which documents are required (as well as how to properly title those documents), or how to put rental income back into the IRA, to help you stay on the right side of the IRS.

The Self-Directed Process

From start to finish, the Self-Directed process is relatively straight-forward:

1. Select a suitable Custodian to establish an IRA that can handle your individual needs.
2. Fund your account via an IRA-to-IRA Transfer, Direct or Indirect Rollover, and/or new IRA Contributions
3. Identify the investment you wish to make, as-well-as perform due diligence prior to investing.
4. Submit the investment’s purchase documents to the IRA Custodian to carry out the desired transaction.

For more info on how the Self-Directed investment process works, please download our Self-Directed IRA Timeline.

Advantages of a Self-Directed IRA

Utilizing a Self-Directed IRA can provide several unique perks to maximize growth of your retirement savings. Here are a few key advantages:

• Endless investment options to choose from
• Options for Tax-Deferred or Tax-Free* growth
• Ability to select investments that are in line with your knowledge, experience, and comfort level
• A single SDIRA can hold multiple assets – helping to create a diversified portfolio

 *Some taxes may apply. We recommend you consult your tax, legal, and investment advisor

Risks of Self-Directed IRAs

Even if thorough research of an asset is done beforehand, investors should be aware of a few disadvantages with self-directed IRAs, which are:

• The Custodian of your SDIRA cannot provide investment or financial advice
• Some investments can have higher risk as they are not part of the traditional marketplace most investors are familiar with
• The IRS prohibits transactions with certain assets or disqualified persons
• You may incur hefty penalties or taxes if certain IRS guidelines aren’t followed

The world of self-directed investing with an IRA can be complicated at times. Whether you’re just getting started or you’ve been investing with a self-directed account for decades, it’s helpful to know the basics. If you still have questions about how the Self-Directed IRA process works, our team of experts are here to help. Call us today at (800) 777-9878 or email us at [email protected].

Exploring the allowable and non-allowable investment options for your IRA can be a bit overwhelming. In addition, the numerous IRA types and regulations surrounding them can be daunting.

Generally, most IRA types are designed to hold traditional investments such as stocks, bonds, and certificates of deposit, among others. However, for investors who wish to diversify their portfolio with alternative investments like real estate, precious metals, and cryptocurrencies, a self-directed IRA can be an ideal platform.

Nevertheless, there are some restrictions to the types of investments a self-directed IRA can hold, which are imposed by IRA rules.

Specific Types of Retail

Real estate investments can be an excellent option for smart investors looking to grow their retirement portfolio through a self-directed IRA. However, certain limitations exist. Although investment properties are permissible, any property directly owned or used by the investor or their family members is not allowed to go into the retirement account. What does this entail?

It means that your present residence or any vacation property used by family members, including those used for business purposes like Airbnb, cannot be sold to your self-directed IRA. The underlying principle is that any property that you or your family benefit from in some way cannot be included in your retirement account.

The IRS created “prohibited transaction rules to prevent IRA owners from utilizing their retirement account for personal gain .  As such, (move the sentence below up)it is worth noting that if you own properties beneficial to yourself or lineal family, including grandparents and grandchildren, you cannot include those properties in your retirement account.

Certain Precious Metals

Incorporating precious metals, such as gold, into a self-directed IRA can be a profitable move, but certain requirements need to be met. The most crucial standard for inclusion is purity.

For instance, gold held in a retirement account must attain a purity level of at least 99.5% to qualify. Certain coins with lower purity levels may also qualify, and custodians that offer this asset, like Digital Trust, can provide guidance for suitable options for a self-directed IRA.

Collectibles

According to the IRS, collectibles are not permissible investments for Individual Retirement Arrangements (IRAs), as outlined in IRS Publication 590-B. This includes items like collectible cars or Fabergé eggs, which cannot be part of a self-directed retirement account.

Furthermore, the publication specifies that using retirement money to purchase a collectible will be deemed a distribution for that year.

Life Insurance

Investment-oriented life insurance products exist that incorporate the features of an investment vehicle. These plans allocate a portion of each payment to death benefits and another portion to a cash account.

The cash account is tax-advantaged and invested like an IRA. However, the cash account portion of life insurance cannot be transferred to your IRA.

Understand the IRA Rules to Diversify a Retirement Portfolio with Alternative Assets

Although certain items and investments are not permissible for inclusion in a self-directed IRA, investors still have access to many excellent choices. Digital Trust provides a broad range of options, ranging from cryptocurrencies to LLCs. Their experienced staff can help you get started with the alternative investment options of your preference. Achieve diversification today with Digital Trust.

Women are at greater risk of spending all or part of their retirement in poverty than men. The gender pay gap and the difference in life expectancy are two main reasons for this discrepancy. Over their lifetime, the average woman makes less, works less, and is less likely to have full-time employment than the average man, which can directly affect her retirement savings.

Additionally, life insurance data shows that women live an average of five years longer than men. A longer expected lifespan may equate to the likelihood of spending more time in retirement and this is exactly why the topic of retirement planning for women is seemingly more important than ever before.

So, when it comes to retirement goals, women may want to consider a different strategy than their male counterparts.

Retirement Planning for Women

You may have likely heard the arguments on all sides about the gender pay gap. This brought forth the formation of many organizations to help close the gap, but that might not immediately help female investors currently juggling family responsibilities and their retirement savings.

Some retirement portfolio management services often elicit similar advice to all genders, overlooking the issues women face, which could potentially leave them more susceptible to impoverishment than men. While this is not intentional, it’s important for women to keep these differences in mind when planning for their future.

Because female investors are statistically more likely to live at least five years longer than men, a good option would be to have their retirement goals reflect this. A good way to prepare is to save a little extra cushion for any unplanned expenses in retirement.

One of the higher unforeseen costs in retirement is medical expenses. Some investors believe that Medicare programs are designed to cover all their costs. In some cases, retirees may need extra cash or a supplemental plan to have everything covered. Unforeseen healthcare costs may become a more significant problem for women because of their potentially longer lifespan.

Meet Your Retirement Planning Goals on a Limited Budget

Some studies have found that women with families are more likely to prioritize the family’s financial needs—like groceries and college funds—before putting money aside for later. When investors consider putting savings ahead of disposable income spending, they are often better able to save for the future. It may take a little getting used to, but paying for the future first reduces the risk of potential poverty later.

Women at all stages of investing should consider using every retirement savings vehicle available. For example, investors can contribute to both a 401(k) and an IRA simultaneously, both of which utilize pre-taxed money.

Mothers who take time off to have or adopt children and are married can consider saving in a spousal IRA while they are out of work. A self-directed IRA account could allow for more diversification which might accrue wealth faster by investing in alternative assets.

Meet Retirement Goals with Alternative Investments

Digital Trust offers women a way to invest their retirement savings or parts of it into alternative assets, like real estate, precious metals, LLCs, and digital currencies.

Investing in alternative assets allows you to diversify outside of traditional market-based products. Some tangible items may be at less risk of losing value in a market meltdown. Take control of your future as you learn more about the retirement possibilities with Digital Trust.*

* Digital Trust, LLC is a custodian of self-directed accounts whose role is nondiscretionary and administrative only. The accountholder must direct all investment transactions and choose the investments for the account. Digital Trust has no responsibility or involvement in selecting any investment. This letter shall not be construed as investment, legal, tax, or financial advice. Please consult with your competent tax advisor and/or legal counsel.

Individual Retirement Accounts (IRAs) are designed to assist investors in saving for retirement. While some investors may prefer to open only a single account type, such as a Roth IRA or Traditional IRA, others may choose to open one of each to maximize their retirement potential.

For investors seeking answers to the question “how can I diversify?” There are no limitations on the number of IRAs that one investor can have. In certain situations, investment advisors may recommend utilizing multiple IRA accounts for various reasons.

Pros

Diversification
Each type of IRA has its own set of rules. For instance, some institutions allow investments in alternative assets like cryptocurrency and real estate with a self-directed IRA (SDIRA), whereas others limit investors to publicly traded assets like stocks, bonds, and mutual funds in a Traditional IRA.

Therefore, having multiple IRAs can help diversify a retirement portfolio. Some investors prefer to use one IRA for each asset class. For example, an investor may hold mutual funds in their Traditional IRA, stocks or bonds in their Roth IRA, and real estate or precious metals in their SDIRA. Having multiple IRAs, each with a different asset class, can help partition a portfolio, making it easier to keep track of.

Spousal IRAs
Investors can fund individual and spousal IRAs, which can be beneficial if a spouse has little to no income. In a spousal IRA situation, investors may choose to contribute the total amount for the year to an individual IRA and the same amount to a spousal IRA on their spouse’s behalf. However, this is only possible if a spouse earns a low income.

Required Minimum Distributions
When an investor turns 73, they must withdraw a certain amount from their IRA each year, which is known as a required minimum distribution (RMD). The total RMD depends on the investor’s age and the account balance.

Investors with multiple IRAs may choose which account to take distributions from while safeguarding the others from distributions and taxes. This is called tax diversification, and some individuals use this strategy when planning to leave money for family or others and do not require it for living expenses during retirement.

Cons

Contributions
Funding multiple IRAs does not necessarily mean that an investor can contribute unlimited amounts to retirement accounts. There are still restrictions on contributions, with a maximum limit of $6,500 or $7,500 (depending on age) across all accounts. Consequently, some individual accounts may not be as large when investors reach retirement age.

Fees
Many accounts come with fees, and multiple fees can erode returns, particularly for investors who are trying to spread $6,500 yearly across several accounts. Hence, it may be wise to consider the fees for each custodian or brokerage when setting up multiple IRAs.

Complexity
The more IRAs an investor funds, the more work is necessary to keep track of their performance. While some investors may enjoy the challenge or risk, others may not have the time. Therefore, investors should consider the complexity involved in holding multiple accounts before making a decision.

How to Diversify with a Self-Directed IRA

One of the best reasons to utilize multiple IRA accounts is for diversification. Savvy investors seeking further diversification can hold alternative assets in a self-directed IRA. Digital Trust makes investing in alternative investments more accessible than ever before.

Moreover, they offer a wide range of products, including cryptocurrency, real estate, LLCs, and precious metals. Investors considering multiple IRAs for diversification purposes can open an account through Digital Trust* today and learn more about funding or rolling retirement money into an SDIRA.

* Digital Trust, LLC is a custodian of self-directed accounts whose role is nondiscretionary and administrative only. The accountholder must direct all investment transactions and choose the investments for the account. Digital Trust has no responsibility or involvement in selecting any investment. Digital Trust does not provide investment, legal, tax, or financial advice. Please consult with your competent tax advisor and/or legal counsel.

With inflation at multi-decade highs and prices increasing across the board, everyone seems to be talking about the impact of inflation. What’s more concerning is how inflation will affect the economy and your investments. The market has dropped significantly, but inflation has not gone away — so how do you prepare your portfolio to be hedged against inflation if this is just the first leg down?

Traditional analysts recommend investing in commodities, gold, bonds, and other alternative assets, but are they really inflation-proof? Gold has long been touted as an inflation hedge, but expert Andrew Bloomenthal recommends bonds instead. He cites that gold prices fluctuate too much and that the return on bonds with increasing rates is a better alternative.

The traditional market isn’t the only one available to consider anymore. There are some alternative assets investors can consider for an IRA to hedge against inflation.

Hedging Your IRA Against Inflation with Alternative Assets

Investing during high inflation can be tricky because there are many moving parts: Rising costs, consumer demand, and governmental reaction are only the beginning. These parts can impact how assets grow and fluctuate.

Rental Properties

In an inflationary environment where rates are rising, there is a chance that real estate prices could drop, but at the same time, rental costs increase.

So, rental properties offset the cost of inflation with higher rents. The good news is that investors can own rental property in an IRA.

Using real estate as a long-term investment may provide a solid IRA infrastructure since housing prices tend to rise over time. Adding rental property to a portfolio may enhance the investment with the income made from rent.

Investors who don’t want the hassle of dealing with tenants can invest in commercial real estate or contribute to a property as a partner or through a crowdfunding site.

Businesses

In addition to real estate, investors can utilize an IRA to contribute to and realize returns from many types of businesses not listed on the stock exchange. This may not seem inflation-proof at first, but thinking strategically, there are plenty of business types that stand a good chance of beating inflationary pressures.

For example, traditional analysts recommend investing in commodities during times of high inflation. Investors can consider companies involved in commodity production or alternative energy production to meet this requirement. Other inflation offsetting industries and business structures include banking, supply chain logistics, and — to a degree — processing and manufacturing.

Cryptocurrency

You can consider a cryptocurrency investment as similar to investing in a business because each cryptocurrency supports or represents a project. There are cryptocurrencies backed by gold and other commodities. Some cryptocurrencies are also created to prove liquidity, and some are made specifically for trading real estate and other smart contracts.

While all cryptocurrencies are not inflation-proof, many projects are disconnected from the mainstream monetary system, shielding them from the effects of inflation. Take EOS, for example; the EOS token supports EOS.IO, a platform for decentralized app development with extremely fast transaction times. The price of the cryptocurrency will likely rise as more app developers use the platform to create and run their apps — giving it the characteristics of a commodity.

Adding Alternative Investments to My IRA

Digital Trust offers ways for retirement savers to add a wide assortment of alternative assets to their portfolios, including real estate, LLCs, precious metals, and more.

Making the switch or opening an account is easy, even if you don’t currently have a self-directed IRA. Simply contact the knowledgeable staff at Digital Trust, and you will be on your way to adding inflation offsetting assets to your IRA in less than a week. Visit Digital Trust to learn more today!

It’s easy to fall into the trap of thinking the only investment opportunities are in stocks, bonds and ETFs. Thanks to self-directed IRAs, there are many ways to get creative and find viable investments for your retirement account.

For instance, investors can make a partial stake in a large rental property or hold another family’s business through a self-directed IRA. Let’s look at where smart investors can find alternative investment ideas and ways to maximize IRA investment opportunities.

Setting up Alternative Asset Management Capabilities

There aren’t many additional steps necessary to hold alternative assets in an IRA. For example, fully purchasing an investment property with funds in an IRA is pretty simple. But what if there’s a chance to join a group putting up the money for a new housing project, mall, or another multi-million dollar commercial real estate deal? Or a friend asks for help to invest in a business, or maybe a startup company is seeking investors for an online investing platform?

A popular way to get started is to open a self-directed IRA-LLC with checkbook control. This structure will allow the option to participate in alternative asset vehicles without waiting for the custodian to approve and cut a check for a specific investment. A checkbook IRA LLC can also empower investors to easily participate in deals and opportunities they might not have otherwise.

Where to Find Alternative Assets

Thanks to technology, a wealth of investment options can be found on alternative asset platforms. Investors can research almost any opportunity online, from crowdfunded real estate deals, peer-to-peer lending, startups, existing private businesses, cryptocurrency, precious metals, land rights and more.

• Consider one of a few options to start investing in commercial real estate. First, investors with a sizable IRA account can speak with a local commercial real estate broker to learn more about local investment opportunities. Also, consider crowdfunding platforms like FundRise that will allow an investor to transfer funds from an IRA-LLC to become a partial commercial real estate investor in various opportunities.
• If business investments sound more appealing, a self-directed retirement account custodian like Digital Trust can create access to equity crowdfunding as a great way to gain exposure to a wide range of private companies.
• There are several ways to discover asset ideas for investors who would like to focus on cryptocurrency and blockchain project investing. Investors can open an account on an exchange using an IRA with checkbook control.
• There is also no shortage of cryptocurrency-based ETFs; for sizable accounts, there are opportunities to invest in private funds. Finally, one great thing about cryptocurrencies is that investors can indirectly invest in physical assets like gold through Pax Gold—which is highly convenient because it allows the holding of gold without the storage or shipping fees.

Opening a Self-Directed IRA

When you open a self-directed IRA with Digital Trust, you can find ways to fund alternative investment ideas. Digital Trust’s friendly and knowledgeable staff can help you open an IRA-LLC with checkbook control in no time.

With a Digital Trust Self-Directed IRA, investors have the power to access unlimited alternative investment options for their retirement. This technology-driven, self-directed approach to developing a truly diversified retirement portfolio can bring peace of mind to investors.

Sign up with Digital Trust today.

Disclaimer: Digital Trust, LLC is a custodian of self-directed accounts whose role is nondiscretionary and administrative only. The accountholder must direct all investment transactions and choose the investments for the account. Digital Trust has no responsibility or involvement in selecting any investment. This letter shall not be construed as investment, legal, tax, or financial advice. Please consult with your competent tax advisor and/or legal counsel.