5 Reasons Why SDIRAs Are Better Than Conventional IRAs
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As most people know, an individual retirement account or IRA is a type of restricted savings account that serves the purpose of providing a steady and safe source of income during retirement.
The individual owner of the account makes routine contributions to the account and depending on the type of IRA, the employer adds to that as well.
These funds are controlled by a financial institution that invests assets in mutual funds or stocks.
All IRAs are not equal and while most are aware of Roth and traditional IRAs, there is another type that allows for greater flexibility and investment opportunities also known as a self-directed IRA.
To assist our readers in expanding their investment portfolio and increase chances of financial success, in this blog, we’ll list 5 reasons why SDIRAs are better than conventional IRAs.
What is a SDIRA?
A self-directed individual retirement account (SDIRA) falls under the category of a Roth or traditional IRA and provides owners an opportunity to save on a tax-advantaged basis.
It has similar IRA contribution limits and the main difference between a SDIRA, and other types of IRA is the type of assets owners can store in the account.
Funds within a self-directed IRA are usually overseen and controlled by a brokerage house that also invests these funds and is responsible for managing the account.
Since investment decisions are executed via a custodian, the owner enjoys greater flexibility in selecting the right investment options.
Also, as the investor is the one carrying out all the transactions, lesser fees need to be paid. While the process of setting up a SDIRA is a bit more challenging than a conventional IRA, the benefits outweigh the costs.
How to Start a Self-Directed IRA?
Brokerage firms offer services for traditional IRAs but not everyone offers to manage a self-directed IRA. Custodians for SDIRAs are usually trust companies and banks.
They offer specialized services depending on the type of assets a SDIRA holds, so you’ll have to do a bit of research to find the ideal IRA broker.
Given the added level of complexity that comes with setting up and managing SDIRAs, you might want to deal with a company that also offers financial advisory services.
So, for example, if you decide to set up a Gold or Silver IRA, an accredited company like Orion Metal Exchange offers valuable advice when it comes to investing in gold coins as well as a host of other services.
The Benefits of a SDIRA over a Conventional IRA
The following are five benefits SDIRA have over conventional IRAs:
- Tax-advantages: As with other Roth and traditional IRAs, SDIRAs either allow owners to earn tax-free profits or defer taxes depending on the type of account.
- Diversification: Perhaps the biggest advantage of SDIRAs is the ability to diversify your investment portfolio beyond the realm of mutual funds and stocks.
- Creditor protection: SDIRAs offer protection against creditors in case of bankruptcy. The limit usually goes up to a million dollars but can vary according to state laws.
- Growth opportunity: SDIRAs are suited for the more daring retirees with unique expertise and experience. The ability to utilize your knowledge or talents is another key advantage provided by SDIRAs
- Stability: Depending on the type of asset, owners can enjoy financial stability. Investing in precious metal storage companies, for example, secures investment against, let’s say, the volatility of the stock market.
Are you interested in setting up a SDIRA? Why not go a step ahead and secure your retirement with gold and silver? Orion Metal Exchange is a highly reputable precious metal investment company with over 5 decade’s worth of experience. They assist clients in converting existing IRAs into precious metal or gold IRAs and guarantee complete transparency and accuracy.
Get in touch with us today for more information!