By J.P. Dahdah, Founder & CEO of Vantage
IRA Alternative Investments
During these uncertain times, one thing is for sure; there isn’t a better time to be a Self-Directed IRA alternative investor. This stealthy secret weapon gives you total control and flexibility over your retirement savings. A self-directed IRA is an empowering device that should not be overlooked or taken for granted. It’s time to take hold of this powerful tool and sharpen your skillset to operate it!
At Vantage, we have two types of IRA alternative investors:
- The Hybrid Alternative Investor: These investors utilize our Self-Directed IRAs to improve the diversification of their retirement portfolio. They benefit from not being correlated to the public market by redirecting a portion of their money into private alternative assets.
- The Pure Alternative Investor: These investors don’t want traditional stock market-based options. They chose to invest solely in alternative investments.
There isn’t a one-size-fits-all action plan that will help you achieve your retirement mission. Each of us and need to develop a tailored strategy to execute; hence the term ‘self-directed.’
The insights below serve as a list of practical tactics that reinforce the advantages of a Self-Directed IRA.
I encourage you to take action to assess what you can do to position your IRA to be triumphant against our current global enemy, the coronavirus pandemic.
Happy investing, and stay healthy!
3 Strategic Insights for Self-Directed IRA Alternative Investors
Consider a Roth Conversion
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- Hybrid Alternative Investor: Cut your losses by liquidating your publicly-traded holdings and evaluate converting your pre-tax Traditional IRA funds into a Self-Directed Roth IRA.
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- Pure Alternative Investor: Look into obtaining an updated “Fair Market Valuation” of your holdings. This would deliver valuation discounts of 20% to 40%. Once your alternative investments are marked down, you could convert those holdings at the decreased value into a Self-Directed Roth IRA.
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- Why is this a great time to consider this? Given the global pandemic, there is a high probability your income will be lower this year than in previous years. This means a Roth conversion may not be as expensive from a tax perspective this year. Placing your retirement holdings into a Roth IRA will create a vehicle in which all withdrawals during your retirement years could be income tax-free. Plus, you wouldn’t be subject to the Required Minimum Distribution.
- Why is this a great time to consider this? Given the global pandemic, there is a high probability your income will be lower this year than in previous years. This means a Roth conversion may not be as expensive from a tax perspective this year. Placing your retirement holdings into a Roth IRA will create a vehicle in which all withdrawals during your retirement years could be income tax-free. Plus, you wouldn’t be subject to the Required Minimum Distribution.
Redirect funds from low-performing bond holdings into secured alternative fixed income promissory notes
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- Hybrid Alternative Investor: Investors who have 50% of their retirement portfolio in traditional fixed income holdings, are experiencing a significant decrease in yields. The smart move may be to redirect those dollars into alternative fixed income strategies in which the yields can range between 6% to 12%.
- Pure Alternative Investor: The COVID-19 pandemic is crumbling the lives of millions of American individuals and small business owners. These people will be seeking to borrow money to help them stay afloat. This offers alternative Self-Directed IRA investors an opportunity to become private lenders.
- Examples of alternative private lending strategies include:
- Seller Financing
- Equipment Leasing
- Small Business Private Lending
- Factoring
- Merchant Financing
- Trust Deeds
- Venture Debt
- Hybrid Alternative Investor: Investors who have 50% of their retirement portfolio in traditional fixed income holdings, are experiencing a significant decrease in yields. The smart move may be to redirect those dollars into alternative fixed income strategies in which the yields can range between 6% to 12%.
Previous Employer 401K Rollover into Self-Directed IRA
Have you been laid off or transitioned into a new company recently? If yes, this may be one of the only silver linings of this pandemic. Termination from employment is one of the triggering events allowing qualified plan participants to roll 401K monies over into a Self-Directed IRA. So, if you, or someone you know, has been laid off, this may be an opportune time to rollover the stock market-based 401K plan assets.
For more information on how you can discover your IRA investing alternatives contact us
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