With freedom comes responsibility and Self-Directed IRA (SDIRA) account holders are not immune to this reality. I regularly share my insights about the long list of powerful beneﬁts SDIRAs oﬀer investors, but as with most things in life, there are hurdles to these accounts which I feel obliged to share as well.
In the world of SDIRAs, the burdens exist within the realm of personal accountability. Building wealth is very hard to do, but when you are a SDIRA investor, you must never overlook the work associated with the words “selfdirected.” The brokerage company IRA industry is built on a digital-based environment focused on automating everything. Buy and sell transactions are done online and can be completed with a few mouse clicks, monthly retirement savings are sold via the concept of “dollar cost averaging” via ACH debits from your bank account, all holdings are valued daily and are delivered to mobile devices so you are never more than a blink away from your portfolio snapshot.
In the alternative investment world of SDIRAs, the opposite is true. Alternative asset Custodians and Administrators, like Vantage, help facilitate investor transactions and provide the IRA reporting services the IRS requires, but the individual account holders bear the majority of the workload on their shoulders. It is not automated. There is a lot of paperwork, signatures, investment research and learning that are the individual investor’s responsibility.
That’s why anyone that has heard me speak publicly knows that I emphasize the fact that SDIRAs are NOT for everyone. To fully understand the value of SDIRAs, you must embrace the beneﬁts and tolerate the burdens. We have to take the little amount of annoying realities with the long list of great things SDIRAs oﬀer. Do I like ﬁlling out my Fair Market Value (FMV) form every year on all my IRA alternative assets? Heck no! Am I thrilled about completing the stack of documents required to buy and sell my retirement holdings? Nope. I do it because I have to in order to reap the immense beneﬁts of the investment returns I expect my IRA to receive in the long term from the alternative investments I have chosen.
We oﬀer our clients e-signature capabilities in an eﬀort reduce the paper intensive aspects typically involved with the SDIRA process, but the entire experienced can’t be 100% digital at this time. With the immergence of alternative asset marketplaces, real estate crowdfunding portals and technological innovations such as blockchain, we believe it is simply a matter of time before most of the burdens of SDIRA investing are eliminated. For me, the empowering beneﬁts of SDIRAs largely outweigh the burdens, but each Self-Directed IRA account holder must decide if they share my sentiment and can look past some of the nuances to reap the upside.
For more information about Real Estate IRAs, please visit: www.VantageIRAs.com/azreia
By J.P. Dahdah, Chief Executive Oﬃcer Vantage Self-Directed Retirement Plans