Follow Up Request

One of our paid subscribers has asked us to follow up on this question:

“Can you please discuss Self-Directed IRAs and the opportunity to purchase properties, commodities, and more through this specialized investment vehicle? There are only 4 – 5 firms in America licensed to perform this, and the typical financial advisor would not speak on this topic as it’s a competitor to them.” PGA

What’s a Self-Directed IRA?

A Self-Directed IRA is a powerful twist on the traditional or Roth IRA, giving investors control over alternative assets — like real estate, private businesses, precious metals, and even cryptocurrencies. It’s essentially an IRA with a wide-open menu beyond stocks, bonds, and mutual funds.

The IRS allows it. Most advisors won’t mention it. Why?

Because it lets you bypass the brokerage-industrial complex and play by your own rules.

What Can You Invest in with an SDIRA?

Think of it as a sandbox built for rebels. Here are just a few of the toys:

• 🏘 Real Estate: Rental homes, apartment buildings, raw land, even farmland. The SDIRA owns the property, you direct the strategy.

• 🪙 Precious Metals: Gold, silver, platinum, and palladium (but only in IRS-approved forms like certain coins and bullion).

• 🏢 Private Equity / Startups: Early-stage companies, private funds, and LLCs — risky, but with potentially explosive upside.

• 🌽 Commodities & Energy: Think oil wells, timber, water rights. Niche, but viable.

• ₿ Cryptocurrency: A newer addition that allows digital asset exposure inside the IRA wrapper.

• 🧩 Tax liens, promissory notes, secured loans, and more.

You can’t use it for collectibles (art, rugs, wine) or life insurance. And no self-dealing — you or your family can’t vacation in that SDIRA-owned beach house. It’s got to be strictly investment-use only.

Why Financial Advisors Don’t Talk About SDIRAs

Because they:

• Don’t earn AUM fees from them.

• Can’t “manage” assets like rental properties or cattle leases.

• Don’t have partnerships with the specialized custodians required to hold these assets.

Most big-name brokerage firms (Schwab, Fidelity, Vanguard) won’t touch SDIRAs. The administrative complexity, IRS compliance requirements, and liability risk mean it’s not profitable for them.

How It Works — The Process

1. Open an SDIRA with a licensed custodian (more on them below).

2. Fund it with a rollover from an existing IRA/401(k) or a new contribution.

3. You direct the custodian to invest in a specific asset.

4. All income generated goes back into the IRA — tax-deferred (or tax-free in a Roth SDIRA).

5. All expenses come out of the IRA too — no personal mingling allowed.

This requires sharp record-keeping and compliance discipline. Mistakes can trigger taxes and penalties that’d wipe out your gains faster than a Vegas weekend with your worst instincts in charge.

Who Offers SDIRA Custodianship?

There are only a few legitimate, IRS-approved custodians in the U.S. that facilitate Self-Directed IRAs. Some of the most established include:

• Equity Trust

• Entrust Group

• IRA Financial

• Advanta IRA

• Broad Financial

These custodians act as neutral administrators — not investment advisors. You bring the deals; they make sure the paperwork passes muster with the IRS.

The Upside

• Diversification beyond public markets.

• Inflation hedges like real estate and gold.

• Hands-on investing for people who know their niche.

• Tax benefits: real estate income grows tax-deferred; you can buy, sell, and reinvest without triggering capital gains until retirement (or never, if it’s a Roth SDIRA).

The Downside (and Warnings)

• Complex rules and compliance traps (e.g., prohibited transactions, self-dealing).

• Lack of liquidity: Good luck selling raw land in a week.

• Higher fees: Setup, annual custodial, and transaction fees can pile up.

• No personal use allowed — not even one night in that IRA-owned ski chalet.

• No margin or lending inside the IRA unless you’re using a non-recourse loan, and even that’s subject to UDFI (Unrelated Debt-Financed Income) taxes.

Who Should Consider a Self-Directed IRA?

• Real estate investors with enough experience and access to deals.

• Entrepreneurs who want to fund or invest in private ventures.

• Commodity or crypto believers looking to shelter gains.

• High-net-worth individuals who want more control than a cookie-cutter portfolio offers.

If you’ve been bored by bonds and burned by beta, this is where the adventurous capital goes.

Final Thought

Patrick (subscriber) you’re right to note: SDIRAs are competition for traditional wealth managers. They can back what they understand — whether that’s duplex rentals in Dallas or lithium mines in Nevada.

Just remember this is the deep end of the pool. Do your due diligence, and work with tax and legal professionals who understand the SDIRA landscape.

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