By J.P. Dahdah, Founder & CEO of Vantage
Early distribution penalties for accessing retirement accounts can be extremely harsh and often seem illogical. But, with a Self-Directed IRA, you can allocate your retirement funds to private lending investments without having to forfeit or pay money out of your account. Below are three reasons why people choose to use their Self-Directed IRA for personal lending purposes.
1. For fixed income: Private lending through your IRA is a strategy. If you want to know exactly how much your investment is earning month in and month out, then fixed income will satisfy that need. For some, it allows them to sleep at night without worrying about the fluctuations in value and income that come with investing inequities.
2. To reduce risk: Typically, when you engage in private lending through your Self-Directed IRA, the loan is implemented with collateral in place. If the borrower fails to pay off the loan, the asset can be seized to compensate the lender.
3. Get close to the investment: While private loans through your Self-Directed IRA need to be arm’s length, you can still know and trust the person or entity you are loaning to, rather than investing in a company you don’t know. If you give a private loan to someone to acquire real estate, you can earn compound interest in some cases, which is a great way to leverage your capital.
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or Info@VantageIRAs.com.