Experience is a good school. But the fees are very high.Investing can be simplified and restricted to one asset class, or it can be made more complex and can involve numerous asset classes. It can provide great learning opportunities; it can introduce you to numerous new people and concepts. It can change your world view and your personal expectations. Self-directed investing is a fascinating challenge. There are almost unlimited investment vehicles from which to choose.
There are several IRA plans available. You will need guidance to select the plan that is best for you. Several self-directed IRA custodians and administrators can help you. Selecting the right self-directed IRA administrator is a very important step.
Types of retirement plans
- *Traditional IRAs.
- *Self-Directed IRAs.
- *401 (k) Plans.
- *403 (b) Plans 457 Plans.
- *SEPs SIMPLE Plans.
- *Defined Benefit Plans.
- *Rollover Plans.
After selecting the self-directed custodian/advisor and funding your plan, you will be ready to start your investing experience. IRS Tax Code allows you to invest your IRA dollars in almost anything, except life insurance and collectibles. Collectibles include works of art, rugs, antiques, metals, gems, jewelry, stamps, coins, alcoholic beverages, and certain other tangible personal property.
Stocks, bonds, mutual funds, exchange-traded funds, options, real estate, mortgages (promissory notes), oil, natural gas, commodities, etc. are all approved as investment classes and are all potentially useful investment vehicles.
The inexperienced investor can become a target for swindlers and cheats. To protect yourself, you need to develop some guidelines and rules.
One rule is to plan on getting rich slowly. A swindler always promises “quick profits” or “fast money.” Just remember, if “quick profits” were available, a stranger would not be offering them to you; that stranger would be keeping all of those “quick profits” for himself and his friends and family.
Another rule is to be wary of unusually high returns. All investments carry risk. Normally, high returns are created by high risk. Examples of high risk are speculative stocks, speculative real estate, speculative bonds, start-up companies, new ventures, etc. Examples of low-risk investments that pay proportionately low returns are FDIC insured savings account, U.S. Government bonds, blue chip stocks, and bonds, etc.
Remember: Price is what you pay, the value is what you get.
Rarely do any of us pay a low price for a high-value asset. Even rarer is when a stranger provides you with such a bargain!
Be wary of swindlers who claim loyalty to your group or your organization.The subject group may be your religious organization, your community volunteer organization, your school alumni organization, or any other group that you like and trust. In our world of complexity, many people feel that they need a quick way of deciding who to trust. Deciding who to trust takes on serious considerations in the world of investing.
Remember: Investing in something is the same as trusting in something.
Investing Tips for the Inexperienced Investor;*Don’t rush the investing process—don’t let anyone rush you into a decision.*Don’t invest all of your capital into one investment.*Understand the asset that you are investing in.*Understand how that asset will repay your investment.*Understand the downside (risk) as well as the upside (gain) potentials.*Understand what will happen if the investment develops problems.*Understand what rules and laws govern your rights and your duties.*Understand any contract or document that you sign.*Understand who you are doing business with.
As you can now see, there are many steps in this process. As a beginner, it might be advisable for you to engage an experienced investor to work with you initially. If you build your knowledge foundation, select the right self-directed IRA administrator, select appropriate investments, and select the right advisor to get you started on the right track you will be dollars ahead, and you will sleep better knowing that you are not “out there on a limb all by yourself.”