5 Things to Look for in a Self-Directed IRA

investing in a self-directed IRA

Many investors may not be familiar with the concept of a self-directed IRA. They’re so blinded by the mainstream financial media that they think there’s no other way to invest in an IRA than through a traditional brokerage or bank. But failing to realize the existence of self-directed IRAs, and how to invest in them, can leave them missing out on many opportunities to make great investment gains.

Self-directed IRAs are those in which you, the investor, direct your IRA towards the investments of your choice. Aside from certain prohibited transactions and investing in collectibles, the sky is the limit when it comes to investing with a self-directed IRA. Whether you want to invest in real estate, speculate in commodities, or open a gold IRA, your options are nearly endless.

Before you decide to open a self-directed IRA, however, there are a few things you need to think about. Just like any IRA, opening a self-directed IRA requires working with companies that offer IRA services. If you want to invest in a gold IRA, you’re not going to want to work with a company that specializes in real estate. Or, if you want to invest in real estate, you won’t want to work with a company that specializes in agricultural commodities.

Typically, there are companies who specialize in helping investors with the specific assets that can go into a self-directed IRA. Here are five things to look for in those companies before you open your self-directed IRA.

1. Knowledgeable Staff

Probably the number one complaint that most self-directed IRA investors have is dealing with staff who don’t know their stuff. You’re the investor, and they’re supposed to be the experts. So, if they’re talking in circles but not really saying anything, or giving you information that you know is wrong, can you really trust them?

Dealing with people who don’t know what they’re doing can cost you dearly. If you’re engaged in a 401(k) rollover, for instance, things have to be done very specifically and in a timely manner, otherwise you could be on the hook for taxes and penalties. The last thing you want is to deal with a company that drags its feet or doesn’t know the tax laws and ends up costing you money.

2. Customer Service

Good customer service from a self-directed IRA company can mean many different things. On the one hand, it’s very important that you’re able to talk to a real person when you need to. The last thing anyone wants is to have to go through a complicated phone tree, wait on hold for several minutes, then finally get someone who may or may not be able to help you. Direct contact with the staff you work with is vitally important.

Then, the general manner of the people you work with is important. Are they friendly? Do they value your time? Do you get the sense that they really care about you and want to see you succeed in your investments? Or do they come across as lazy, disinterested, and just looking to hang up the phone as soon as they can? Your first impression on the phone could give you everything you need to know about the quality of the company you’re working with.

3. Low Fees

One of the most important things to investors is paying low fees, or at least fees that are low relative to your returns. If you’re gaining 10% per year but paying fees that total 4%, your total returns are going to suffer. You’ll want to find out how much you have to pay for account maintenance fees, storage fees, etc. You also want to consider whether fees are fixed or on a sliding scale.

When it comes to a self-directed IRA, remember that you are in charge and responsible for your investment performance. Make sure to shop around to find the best deal you can.

4. Experienced Custodians

When it comes to selecting a self-directed IRA custodian, you’ll first need to find one who specializes in the assets you invest in. Then you’ll want to select one with a track record of exemplary customer service.

Typically, choosing a custodian experienced with your specific assets is the best choice. That’s especially true when you’re dealing with precious metals such as gold and silver. You’ll want to look for a seasoned custodian that has been trusted by thousands of customers and that has years and years of experience storing, shipping, and safeguarding precious metals. When you’re investing tens or hundreds of thousands of dollars that you’ve spent a lifetime accumulating, you can’t be too careful with protecting your assets.

With a self-directed IRA custodian, you’re going to want to know many of the same things as with any other self-directed IRA company. Do the custodial employees know what they’re doing? Are they easy to get a hold of? And do they have a quick and easy (ideally online) way for you to check up on your self-directed IRA holdings whenever you want to? These are important questions to ask before you trust any custodian with your assets.

5. Information and Transparency

Sometimes you want to find out more about a self-directed IRA before you make the decision to open one. Perusing various websites of self-directed IRA companies can be a good way to figure out how open and transparent these companies are before you deal with them.

Research their websites and notice how much detail they use to describe the process of opening a self-directed IRA. Check that they answer questions like:

  • What is a self-directed IRA?
  • How does a self-directed IRA work?
  • What are the advantages of a self-directed IRA?
  • How do I fund my self-directed IRA?
  • What is a 401(k) rollover?
  • What are the laws and regulations regarding a self-directed IRA?
  • How are my assets kept secure?
  • How do I take distributions?

Companies that anticipate these kinds of questions and prepare potential customers ahead of time through their websites are already doing the job of informing you ahead of time, making sure that you’re not coming into this process blind. On the other hand, you may have some companies that love to talk about all the benefits of a self-directed IRA but that offer you few details about how the process actually works.

You’ll also want to be aware that some companies may advertise a home storage IRA option. That’s a bad idea on many levels, but you won’t read about that from the companies advertising that option. IRA assets have to be held by a custodian, and the hurdles you’d face in being considered a custodian by the IRS are significant.

The consequences of falling afoul of those regulations can be severe and include significant financial penalties. If you come across companies advertising a home storage option that don’t warn you up front about the pitfalls, you may just want to walk away.

When it comes to transparency, make sure that the people you partner with in setting up your self-directed IRA answer all of your questions directly. If they’re unable to give you an answer, do they tell you truthfully that they don’t know? Or do they try to talk around it to make it seem that they know what they’re talking about? If they refer you to someone else, how long does it take for you to get an answer to your questions? Anything less than full transparency up front could be a bad sign.

A Self-Directed IRA Puts You in Control

Remember that the purpose of a self-directed IRA is to put you in direct control of your retirement savings. From start to finish, a self-directed IRA should suit your investment needs and benefit you and your retirement goals. And part of that means picking the right assets to work for you.

If you’re looking for an investment to protect your wealth against financial turmoil and continue making gains when stock markets are hemorrhaging, then a self-directed gold IRA could be just the thing for you. And with our years of experience and thousands of satisfied customers, Goldco has established itself as an industry leader in helping gold IRA investors.

Goldco’s representatives take pride in serving our customers and helping them achieve their dreams through an investment in precious metals. Contact Goldco today to learn more about how a gold IRA can help you protect your wealth and safeguard your retirement savings.

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