Self Directed IRAs and Supporting Local Investment

Excited for retirement? The golden years mean relaxation, travel, and no 9-5 schedule. But everyone knows they need to save to guarantee their desired retirement. Even as a child, I was told to start saving early – as in the moment I got a job I needed to start putting money away. It’s a smart idea, as studies have verified that saving a few years earlier could mean tens of thousands more for retirement as shown in this image from Business Insider illustrating the power of compounded interest:

 

 

compound interest

 

Now the only question is: how do I save? There’s the traditional 401K model, but there’s also a lesser known model called a self-directed IRA.

A self-directed IRA allows investments in previously unavailable markets such as real estate or tax lien certificates along with the benefits of the traditional IRA, namely tax-free investment. A self directed IRA shares most of the same qualities of a 401k including the same rules to cash out. But you will be in charge of your own investments and have the freedom to invest in businesses or people you know and personally believe in. Take for example, Meghan Williamson’s self-directed IRA. She helped local business owner Karen Lawrence by investing her savings in Karen’s business to help her get out of debt. Essentially, Meghan loaned some of her savings from her self-directed IRA to Karen as an investment. It was a mutually beneficial experience because Karen repaid her debts and Meghan earned interest on her investment.  

 

Using a self-directed IRA allows you to invest tax free in businesses you trust to better save for that long awaited retirement. Through investing locally, you help your community thrive while watching compounded interest transform your savings into a hefty sum. With self-directed IRAs the world is your investment oyster, so to speak.

Additional Reading:

http://www.businessinsider.com/compound-interest-retirement-funds-2014-3

http://invest-local.org/small-business-credit-card-debt-finds-relief-through-local-investing/

https://www.trustetc.com/self-directed-ira/faqs

 

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