For many people, self-directed IRA accounts (SDIRA) are appealing because they allow for greater investment freedom. Instead of being limited to traditional types of securities, assets in a self-directed IRA can be invested in almost any type of securities the account holder wishes like real estate, start-up companies, even gold.
Traditionally, real estate has been one of the go-to investment vehicles when it comes to SDIRA portfolio diversification. Not only is real estate less volatile compared to the stock market over time, but the security it offers in the form of tangible equity is unique.
If done correctly, investing in real estate should be able to meet the retirement account’s goal of earning good returns in the long term, security of the retirement fund, and portfolio diversification to minimize the risk of losses.
Advantages of Self-Directed IRA
Control
Self-directed IRA accounts allow account holders to invest their funds in the types of investments that meet plan requirements.
Investment Opportunities
Unlike traditional IRAs that have limited types of securities it can invest in, SDIRA allows the account holder to invest in real estate, currency, tax liens, gold, and other high-growth opportunities.
Tax Advantages
Profits made from investments held in the account are tax-deferred.
Retirement Fund
SDIRA allows investors to put their money into potentially more profitable securities for long-term investment, which can build funds for retirement.
Why Invest in Real Estate
Using a self-directed IRA to invest in real estate can be beneficial if done properly because they are:
Less Volatile
Real estate is less volatile than the stock market. This is because real estate is a finite tangible asset based on limited land that is always outpaced by the growing population.
Growth Potential Over Time
The market dictates the price, with the growing population (demand) and limited supply of housing, historically and in the long-run, real estate offers a less volatile haven for investments and offers growth.
Hedge Against Inflation
Inflationary pressures drive the price of goods and services up over time. As they increase, the value of land and homes also increases, counterbalancing the effect of inflation. This results in capital appreciation and increased rental income.
Investing through EquityDoor
EquityDoor is an online marketplace for real estate investing that matches developers and investors to bring together capital for real estate deals. Investors can invest in these opportunities with as little as $1,000. This means more opportunities for investors to get involved in real estate without having to invest huge amounts of money upfront.
Developers (issuers) can create a profile with the information they want potential investors to see, including photos of their projects, financial details, and contact information. Investors can then search for the type of project that interests them, review developer profiles, and contact the developer to request more information about the project.
EquityDoor is a platform that makes it easier and cheaper for people to invest in properties. And, by eliminating the typical costs, complexity, and reliance on traditional banks and real estate insiders, it makes investing more affordable and inclusive that allows almost anyone to invest including non-accredited investors.