Self-Directed IRA: Larger Gains and More Choices

You may be thinking that your standard IRA, whether it be a traditional IRA or a Roth IRA , is already "self-directed" by yourself. Well, that is not really the case . A standard IRA will usually be with a bank, insurance company, brokerage firm, or a mutual fund company. These financial institutions will generally limit your IRA investments to CDs, stocks, bonds, and their own mutual funds.

On the other hand, setting up a Self-Directed IRA will allow you many more potential investment choices. These choices can enable you to diversify your investment portfolio. These additional investments can include: 

  • Real Estate & Foreclosures - Includes houses, apartment buildings, commercial property, and land.

  • Secured Notes - This is money that is loaned to someone and the note is usually secured by real estate which is the collateral for the loan.

  • Unsecured Notes - You loan someone money and your collateral is only their word to pay back the note --- extremely risky for your IRA.

  • Cryptocurrency - This is the "hot" investment choice for the  2020's.  Very complicated, extremely volatile, and can be risky.  Make sure you know what you're doing with Cryptocurrency --- it appears that a great number of people just jump in and really don't understand Crypto and get burned.

  • Tax Lien Certificates - These are sold by a county for unpaid real property taxes. You buy the certificate and get paid back with high interest when the property owner finally pays the taxes. If the taxes are never paid, you have a lien against the property and you could take possession of the property.

  • Private placements - These are investments in small closed companies that are not offered to the public. They are usually for Start-Up companies that are seeking capitalization.

  • Mutual Funds and Certificates of Deposit (CDs) - I am referring to mutual funds and CDs that are not available to you at your standard IRA account.

  • Green Investing / Socially Responsible Investing (SRI) - Investing in a way that improves society and your community.

  • Investing in Your own Business - Yes, you could use your 401K rollover to your Self-Directed IRA to fund your own business or even a franchise purchase.  

  • Bullion - Includes gold, silver, platinum,and palladium bullion.

Checkbook IRA LLC

Your IRA assets could also be put into what is known as a Checkbook IRA which is usually a separate entity formed as a Limited Liability Company or LLC. You as sole owner and manager of the LLC are now  able to invest your IRA assets into many types of diversified assets as long as you don't violate the IRS prohibited transaction rules. 


You should be aware that the IRS has never really approved of these Checkbook Ira LLCs. In fact, a  2021 U.S. Tax Court case, McNulty v. Commissioner ruled  against the owner of a Checkbook IRA LLC -- so proceed with caution.