How a Self-Directed IRA Works

We want to live our best life during retirement but doing so requires a lot of funds. Now, if you didn’t have a savings culture as a young person, living the life of your dream at old age may be near impossible. This is where a retirement account comes to play. 

Over time, people have relied on stocks, bonds, certificates of deposits, and mutual funds as investment instruments. This is usually done through a 401(k) plan or an IRA (individual retirement account). However, these assets do not offer the kind of diversification that today’s investors require to maximize returns on their investment.

Instead of a 401(k) plan, investors can now set up a self-directed IRA, which offers a platform for them to invest in other types of assets. In today’s post, you will learn about a self-directed IRA, its advantages, and how it works. Let’s get started.

What Is a Self-Directed IRA?

It is a retirement account that allows people to invest in various assets that cannot be found in a Roth or traditional IRA. These alternatives include the following:

  • Water rights
  • Oil and Gas
  • Mineral rights
  • Real estate
  • Livestock
  • Promissory notes
  • Raw or undeveloped land
  • LLC membership interests
  • Tax lien certificate
  • Cryptocurrency
  • Precious metals

The self-directed IRA is also referred to as a gold IRA. It allows you to invest in physical precious metals like gold, silver, palladium, and platinum in the form of coins or bullion. You can also hold other securities that are related to precious metals, such as gold certificates, ETFs, and stocks of mining companies.

A gold IRA is held differently from a traditional or Roth IRA even though the rules guiding distributions and contribution limits are the same. You can open a gold IRA through a trusted custodian (bank, Trust company, or brokerage firm).

Advantages of a Self-Directed Gold IRA

The advantages of this type of account are:

Asset Diversification

A diversified portfolio rules out the volatility embedded within investments. It aims at stability and high returns in the long run. After the economic crisis in 2008, Americans have discovered that relying on paper assets can make them lose all their investments in one day. 

Geopolitical tensions, inflation, and government debt, among others, can quickly crumble the US dollar. Hence, it is advisable to distribute funds across different investment sectors. In this case, you will benefit from each class of asset. 

By investing in precious metals, you can strategically maximize security from long-term holdings. Some metals can be held over a short or medium period and still yield profit. You can take advantage of this free gold IRA kit to get started.


Governments, institutions, and individuals regard precious metals as a safe haven. This attribute extends to a gold IRA because it holds physical metals. Paper assets can be devalued following a crisis but that of precious metals, such as gold, can never go down to zero. 

Personal Control

With a self-directed gold IRA, you can decide what to do with your assets, the type of assets to invest in, and how to distribute them. Even when you want to withdraw your assets, you can collect the physical metals or sell them to the depository and collect cash.

How to Open a Gold IRA

Here’s how to open a gold IRA:

Select a Self-Directed IRA Company

The first thing you must do is to find a company that offers a self-directed IRA. The company will assist you in setting up the account, transferring funds, purchasing the metals, and ensuring that the metals are delivered to an approved depository. The company can also stand in as a custodian to ensure that your account complies with the IRS standards.

Gold investment is becoming increasingly popular and many self-directed IRA companies exist. Therefore, ensure you compare the quality of their customer care, general services, and fees before deciding on which company to work with. 

Fund the Account

After opening the account, you need funds to enable you to purchase and invest in precious metals. You can fund the account through the following means:

  • Wire transfer, cash, or check
  • Rollover from another retirement account
  • Direct transfer from your IRA to a self-directed IRA

Each method has its pros and cons. The custodian should be able to advise you on the more advantageous method.

Choose Your Preferred Metals

After funding your account successfully, you can go ahead and purchase your preferred precious metal. It is important to know that the IRS has a standard that qualifies metals for investment. So, you need to be careful with your purchase.

Some self-directed IRA companies sell approved metals. This way, you are sure that your bullion is investment-grade. Other companies have affiliations with trusted bullion dealers. Your custodian will then assist you to make the purchase using the funds in your account.

Afterward, the metals will be delivered to a depository that the Internal Revenue Service approves of. You cannot hold physical gold at home if you want to invest in a gold IRA. However, note that storing metals in a depository attracts storage fees. So, make sure you find out the cost from your custodian before choosing a depository.

Monitor Your Investment’s Performance

Because a gold IRA is self-directed, you can monitor how your investment is faring. Although some custodians have online dashboards where you can view your account, others don’t. If you consider insight and regular updates a priority, ensure you find out in advance whether the IRA company offers such services.  

In Summary

Setting up a gold IRA gives you peace of mind because you know that your assets will not lose value in the twinkling of an eye. Your assets will be safe from inflation, the ever-fluctuating stock market, and currency devaluation.

Following the impact of the Corona Virus, the economy is still shaky. So, this is the best time to invest in gold and other precious metals. Setting up a gold IRA is very easy with the help of an expert. Instead of worrying about what to do, you can utilize this done-for-you gold IRA kit to get started.

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