You probably already know all 10 advantages of self-directed IRAs. You’ve probably already set up your own self-directed IRA and use it to fund deals.
But how many people in your circle of influence have set up a self-directed IRA in order to invest with you?
Your family members, friends, colleagues and other contacts probably don’t know why they should set up a self-directed IRA. So you need to tell them.
You might use these 10 advantages as talking points in a value-add presentation at a meet-up group, chamber of commerce meeting, or Kiwanis club. Maybe you keep a blog and could use this as a topic. Or maybe you send out a newsletter every so often.
The point is, this is valuable information. Get it out there. Get your business out there.
Ok, on to these 10 juicy reasons everyone needs a self-directed IRA.
1. COMPOUNDING WEALTH
The most effective way to talk about how a self-directed IRA compounds wealth is the Rule of 72. You can google Rule of 72 and find plenty of images and descriptions of it. Include a table like this in your newsletter to help your readers understand the rule:
The stock market only yields a 6% return (after fees and expenses). So 48 years from now, would you rather have $160,000 (the amount you could get from the stock market) or $2,560,000 (the amount you could get with a self-directed IRA)?
2. TAX ADVANTAGES
In addition to that 12% return, self-directed IRAs have the advantage of being tax free or tax deferred money.
If you need some talking points or bullet points for your newsletter, do a little research. Check out a website like www.horizontrust.com and read about some of the tax advantages of self-directed IRAs. Put those points into your talk or newsletter (and don’t forget to reference your sources!).
3. ASSET PROTECTION
Again, Google is your best friend. Search for info about asset protection in self-directed IRAs and see what you can learn and use in your marketing.
Remember, the people in your circle of influence are already saving for retirement. And since the average person changes jobs 7 times during their career, some of your contacts already have money in an old 401k from the last job they left.
They can roll that money over to an IRA and you can use it for real estate deals. They’re already saving for retirement. You’re just providing them with a high-return opportunity.
4. WEALTH FOR FUTURE GENERATIONS
At the end of the day, the goal isn’t to use up all your money in retirement. It’s to have money left over that can be passed along to future generations. A self-directed IRA, specifically a Roth IRA, is the best fit to meet that goal.
5. INVESTMENT DIVERSIFICATION
This is one of the key hooks I use when I’m raising money.
When I meet with someone new about their 401k, I teach them how they can invest in real estate in their self-directed IRA. I teach them how they can flip a property, own rentals, own apartment buildings, and invest in private placements right in their IRA—boom, investment diversification.
6. INVEST IN WHAT YOU KNOW
So many people have no clue what their financial advisor is telling them to get into. They don’t really know why they get a good return. They might not even know the stock market was actually down about 6% in 2018 (you can check this out on a site like https://finance.yahoo.com/).
Are you teaching your contacts about this? In the stock market in the last year (at least on the day I checked) an investor would have lost about 9% after paying fees. But investing in real estate with private lending can earn you a 12% fixed return, without fees.
Want to figure out the stock market loss or gain? On a site like Yahoo Finance, go back one year and look at the open and close of the S&P 500 on the current date and the date a year ago. Find the difference, then divide by the original value (from a year ago):
Now you can periodically go back to all your contacts with up-to-date info and ask them if they knew the market was up or down a certain amount—not including fees.
Of course, there’s a trade-off. Real estate isn’t liquid like stocks, bonds, mutual funds, and cash. All of that can be liquidated at any time. But remember, if you’re investing with a self-directed IRA, you don’t need the cash right now—you’re saving for retirement.
7. SEVEN ACCOUNT TYPES
There are seven different account types:
- Traditional IRA
- Roth IRA
- Coverdell Education Savings Account (CESA)
- HSA: Individual
- Individual 401k (small business retirement)
- Simplified Employee Pension (SEP) (small business retirement)
- Simple IRA (small business retirement)
You can use sites like www.iplangroup.com to find information about what a promissory note is, info about self-directed IRA fees, or investing with a self-directed Roth IRA. Again, include information in your talks and newsletters that’s going to help your contacts understand the benefits of a self-directed IRA, including the variety of options to fit their personal situation and needs.
8. AVAILABLE TO ALMOST EVERYONE
The people in your circle of influence can set up their own self-directed IRAs with just a few hundred dollars. That doesn’t go very far, but if they can roll over money then you’re in business.
One of my first investors set up an account using $5,000. Then his wife went through a job transition. They rolled over the $120,000 in her account, and within a few short years they had $180,000 in that self-directed IRA. That’s a 45% increase in just a few years.
9. EVEN SMALL BALANCE ACCOUNTS CAN BE INVESTED
A 45% increase is no joke. So even if an investor has a small amount to invest, over time that 45% will add up. And if other small balance accounts are rolled into the self-directed IRA, with time those dollars multiply.
10. MILLIONS OF DOLLARS ARE AVAILABLE TO FINANCE REAL ESTATE DEALS
The last advantage is an advantage for you, the real estate investor. This is why you should be talking to everyone you know about self-directed IRAs—so they will think of you first when they’re wondering how to invest.
I’ve raised so much money for deals not because I have the perfect elevator pitch or a killer marketing campaign—but just because I educate people about self-directed IRAs. I’ve raised millions of dollars that way.
SO WHAT ABOUT YOU?
Are you ready to find some private money to fund your own deals? Get out there and start teaching others about the benefits of self-directed IRAs. Send out newsletters. Set up in-person appointments. Walk potential investors through the money magnet interview—get them excited about the opportunity you’re offering.
You’re not a real estate investor until you do something with the information you’re learning. Raise money so you can make offers, buy and flip properties, own properties that keep cash flowing. That’s what it’s all about. And it starts when you’re excited about getting other people excited about the 10 advantages of self-directed IRAs.
So go. Get teaching.