What is a Self Directed IRA (SDIRA)? Should I Use One?

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There are many different ways to invest for long-term wealth. And investing in an individual retirement account (IRA) is an excellent choice for many people.

Regular IRAs hold government- regulated investments, like traditional stocks, bonds, mutual funds, ETFs, and CDs. And these investments are an excellent fit for most people.

Yet some investors want more options and might consider a self-directed IRA. It’s a tax-advantaged account that holds non-traditional investments, like artwork or real estate.

But many non-traditional investments have added risk, complexity, and costs. So before you consider a self-directed IRA, it’s wise to learn more and proceed with caution.

Read on so you can make a wise investment decision on whether one is a good fit for you.

What is a self-directed IRA (SDIRA)?

A self-directed IRA is a variation of a traditional or Roth IRA. It has the same tax advantages, rules, and limitations as regular IRAs.

What makes it different is the assets owned in the account.

Self-directed individual retirement accounts hold a wide range of non-traditional investments, like cryptocurrency, collectibles, hedge funds…