Best Self Directed IRA Companies

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Contributor, Benzinga
August 18, 2023

Financial planners say that you'll need at least 80% of your pre-retirement income to sustain your current lifestyle at retirement. For example, you earn $160,000 annually and you apply the 80% rule, you'll need about $128,000 in annual income at retirement. Aside from other income sources like social security benefits and pensions, a large chunk of the income will come from savings or a brokerage account of some kind that manages those savings.

Although you can leverage employer-sponsored saving plans like 401(k), that alone may not be sufficient to accumulate your target savings. That's where an individual retirement account (IRA) comes in. IRAs are unique retirement accounts that allow you to invest or save for retirement in a tax-deferred fashion. Self directed investing gives you more options, but it will not increase the contribution limit on your retirement savings accounts. Instead, you can diversify your savings, enjoy a tax deduction when the money is withdrawn (or other tax advantaves) and make the most of your workplace retirement plan.

The Best SDIRA Companies

In both traditional and Roth IRAs, funds are controlled by private managers who oversee the investments and grow the fund. However, in a SDIRA, you manage and have complete control over your retirement account. Therefore, a self-directed IRA (SDIRA) makes for a high level of flexibility. Nevertheless, flexibility is not the only reason why most investors prefer SDIRAs.

Traditional and Roth IRAs focus on traditional investment offerings like bonds, stocks, dividends, exchange-traded funds (ETFs) and mutual funds. In contrast, SDIRAs offer a vast array of diverse investment alternatives, including real estate, precious metals, private loans, cryptocurrencies and private equity. Therefore SDIRA shareholders are poised to generate a high return on investment (ROI) and earn more profit.

However, an SDIRA is ideal for experienced investors with comprehensive knowledge of trading asset classes who still want to make the most of any tax credit or advantage that might come their way. Such investors require little to no investment advice or helpful tips. Few SDIRA investment companies offer practical help and guidance, especially when setting up, managing and investing in SDIRAs.

Suppose you're looking forward to investing in an SDIRA. In that case, this list will guide you toward choosing the best companies to help kickstart your investment.

Best Overall: Equity Trust

  • securely through Equity Trust's website
    securely through Equity Trust's website
    Best For:
    Individual investors seeking tax-advantaged accounts
    Rating:
    Read Review

Equity Trust sports well over 200,000 customers and over $30 billion in managed assets, making this platform one of the biggest in the sector. However, it had humble beginnings as an SDIRA that worked only with real estate offerings. Over the last 45 years, it has branched out into private equity offerings, tax liens, crypto, metals and even foreign currencies.

What does all this mean for you? You can invest your retirement funds in something that is much more powerful, and you can still add on things like stocks, bonds, mutual funds and ETFs. There are educational tools available for you, and you get the tax benefits that come with a properly managed IRA.

However, not offering checkbook control means you have to direct the platform to help you make each new transaction. Even so, this works well with the fact that ETC has over 400 specialists who can help you with these transactions and make it possible for you to improve your retirement savings.

Pros

  • It’s much easier to create a strong mix of investments
  • ETC is not a specialist firm, giving you more options for investing and a lot more information

Cons

  • Many consumers may feel hamstrung by the fact that they need to reach out any time they’re ready to make a new transaction

Best for Audit Protection: IRA Financial Group

  • securely through IRA Financial Group's website
    securely through IRA Financial Group's website
    Best For:
    Audit Protection
    Rating:

IRA Financial stands out from the crowd because it does more than help you set up alternative IRA accounts and self direct your investments. You get assistance with the tax implications of those investments.

Plus, IRA Financial offers a checkbook IRA to investors to use on real estate, private loans, precious metals, foreign currencies and cryptocurrencies. If you want to learn more about these investments, you can study on the site and learn what an SDIRA can do for you.

There are no transaction fees, a $999 setup fee and an annual fee of $360. That’s all you need to get started, work with a strong investment advisor and begin managing your retirement savings in a much better manner.

Some could argue that the account setup process is tedious, the efficient customer service specialists make it easier to understand and execute your investment decisions on your schedule.

Pros

  • Tax specialists are on staff to help you learn how taxation works for each investment
  • Checkbook control makes it easier for you to decide where your money will go

Cons

  • Some investors may not prefer to pay large registration and custodial fees on retirement savings they plan to keep

Best for Real Estate Investing: uDirect IRA

  • securely through uDirect IRA's website
    securely through uDirect IRA's website
    Best For:
    Real Estate Investing
    Rating:

Founded by real estate expert Karen Hall, uDirect IRA broke into the SDIRA space in 2009 as a real estate investment alternative. Yes, the brand offers more alternatives today, but it is undoubtedly a real estate expert.

Sure, you get checkbook control, but you can invest in unique things like private loans, closely-held companies, accounts receivable financing, legal settlements and precious metals. This might be the perfect way to diversify your retirement savings, especially if you have some know-how in these areas.

While the first 6 transactions are free, you will pay a $35 transaction fee for each transaction thereafter. You can learn-and-earn through the site, reach out if you have questions and make more out of the retirement funds you’ve already collected

Pros

  • The platform started as a real estate expert and can be of great help in this space, which is so popular among Americans
  • Choosing from unique assets will help you get as far away from the stock market as possible, which is an advantage for many people

Cons

  • The platform may not allow you to invest in as many alternatives as you would like

Best for Gold and Silver IRAs: Augusta Precious Metals

Augusta Precious Metals is a leading gold and silver investment firm that allows you to purchase gold and silver coins or bullion. APM uses enhanced security protocols for delivery and storage, and they also help you set up Gold or Silver IRAs as needed.

Every investment you make through an IRA set up by Augusta Precious Metals is self-directed, and you pay no management fees. This is a good way to start diversifying your employee pension plan if it’s administered through an IRA. If you’re thinking of hedging against risk or want to start saving for the future, you can use APM. Remember, too, that you still get the same tax advantages because it’s still an IRA, it merely invests in gold or silver.

Also note that some investors might diversify their retirement portfolio with physical silver and gold simply because they prefer to keep a collection in their homes, making this investment product that much more versatile.

Pros

  • The platform can help you buy and store precious metals added to your portfolio
  • The expert team can better explain how to manage these investments and if precious metals will fit into your retirement or investing strategy

Cons

  • Because the platform is also a purveyor of precious metals, you must shop their products when hunting for precious metal investments

Best for Larger Portfolios: Rocket Dollar

Rocket Dollar started in 2018, but it has made significant inroads in the SDIRa market. The most interesting part of this platform is that you can, for example, set up an account with $300,000 in assets and another with just $20,000, but they will both be charged the same $360 fee. This means that you want to wait until you have more assets to invest before opening your account.

You can get into SEP IRAs and a range of alternative assets. You will have checkbook control, and you can upgrade to Gold where you will get more access to customer care. This account services team is so helpful that they can even work with the company’s investment partners on your behalf.

You can use these SDIRAs to invest in a range of alt assets, and you can also read about how these assets work if you’re new to the space.

Pros

  • The one-time setup fee helps you save money across all your accounts
  • The range of accounts allows you to decide how much you want to buy in
  • Investors with large portfolios can start here and get more for their money as they invest

Cons

  • Administrative fees on the site might be higher than you were hoping for

Best Investors Experience: Alto IRA

  • securely through Alto IRA's website
    securely through Alto IRA's website
    Best For:
    Investors Experience
    Rating:

AltoIRA is relatively new to the space, but it helps to cut out much of the complexity inherent in retirement investing with SDIRAs. The firm offers a scalable technology platform that combines user-friendly interfaces and cost-effective automation for anyone, whether they are an experienced investors or a novice. To keep a long story short, this platform uses technology to make your life easier.

You can invest in things like crypto and real estate companies or angel investing funds on an affordable $10 monthly, which provides access to investments within Alto's partner networks. Plus, each investment incurs a fee of $10.

You can get online and phone support easily, and there is quite a lot of information on the site to help you learn more about retirement investing.

Pros

  • You can invest in many different assets that are not offered by every platform
  • The CryptoIRA is a unique instrument designed by the firm just for investors like you

Cons

  • The one-time investment fee could start to add up

Features to Look for in Best Self-Directed IRA

You need to consider certain qualities or features when looking for an SDIRA company. Let's review some of the features.

Low Fees

The fee structure is possibly the most crucial thing when looking for an SDIRA company. Let's face it; nobody wants to pay excessive fees regardless of the service quality. So it would be best if you looked for companies that charge low prices for their services. Some SDIRA companies charge a percentage while others charge flat transaction fees. Some don't charge fees. Ultimately, the less you spend on your IRA charges, the more money you have.

Customer Care

SDIRAs are an inherently complex asset class. Often, you'll require professional guidance for completing specific actions on your IRA. This need is especially high during the account setup process. Therefore, your chosen SDIRA company must have good customer care. This feature will save you a lot of hassle and inconvenience down the road. 

Available Assets

Say you are primarily interested in diversifying your IRA to include real estate. You won't want to employ an SDIRA company that offers cryptocurrencies as its main alternative investment option. To avoid a situation like this, check each SDIRA company on your shortlist to see if they allow investments in the types of assets you wish to buy. 

Easy-to-Use Investment Tools

Setting up and managing a self-directed IRA is not simple. You do not want to further complicate the process by using complex investment tools that might require you to attend training or take tutorials. 

A good SDIRA custodian will provide investment tools that you can easily use and understand. It is best to avoid complex investment tools until you get a good grip on how things work.

How to Start a Self-Directed IRA for your Retirement Investment

Now that you know what to look for in your ideal SDIRA, let's quickly review the steps you'll take to start your SDIRA.

Step 1: Choose Your Assets

Before you start investing your retirement funds, the first thing to do is list out the investment assets you want to buy. Avoid rushing to open an account with a custodian without knowing what assets to go for. Take your time and do your due diligence leveraging the information you've sourced from the internet and other relevant sources. That way, you'll have clarity on what investment assets to go for.

Step 2: Choose a Self-Directed IRA Company

Once you've determined the investment assets you want to buy, it'll be time to pick your ideal SDIRA company. Ensure the custodian has all the attributes you are looking for in your SDIRA.

Step 3: Set Up an Account and Pay Fees

You'll want to set up your account now that you've found an ideal SDIRA company that meets your needs. An easy way to go about this is by checking the company's website for guidelines related to the SDIRA you want to set up. If the custodian charges a registration or application fee, pay the fees.

Step 4: Make Your Contribution

Once you've set up your account, you'll need to deposit money to fund your SDIRA so that you can now purchase your investment assets. SDIRAs are subject to the same IRS rules as other IRAs, with limits imposed on how much you can contribute annually. Additional rules apply to IRA rollovers. With most SDIRA companies, you can use your credit card to pay directly. Regardless, your custodian will brief you on acceptable payment methods.

Step 5: Measure Your Risk Tolerance

Unlike a bank account or savings plan, a traditional or Roth SDIRA requires you to consider your risk tolerance for the asset type in which you’ve chosen to invest, along with how these dovetail with your retirement goals. For example, if you plan to invest in real estate, that has a good track record of returns. However, you might also choose a riskier investment like tax lien certificates which you know little about. Decide if the risk is worth it for you or not. Everyone’s answer will be different.

How You Can Improve Your Finances

Financial freedom is supreme. Everything in your life begins to fall into place once you achieve financial freedom. Financial improvement and freedom go hand in hand.

Unfortunately, not everybody is disciplined enough to work towards financial improvement. Let's briefly review some approaches that can fast-track your journey to financial improvement.

Start Budgeting

A simple yet effective tactic for transforming your finances is budgeting. One of the most predominant underlying causes of bad finances is excessive spending on non-essentials. A budget helps eliminate that by highlighting unnecessary expenses. You can then act accordingly and change your spending habits.

Pay Off Debts

Your debts are a significant hurdle on your road to financial independence. Suppose you want to change or improve your finances and gain more economic opportunities. In that case, it is advisable to settle your debts as soon as possible. 

It would help if you didn't pay just the minimum amount repayable. Instead, what you should do is actively try to repay these debts. An excellent way to do this is by adjusting your budget to reallocate as much discretionary budget as you can to your debt payment.

Save Regularly

Saving is a surefire way to improve your finances. It is a passive approach to building your wealth. So be sure to deposit money to your savings account regularly. It could be weekly, monthly or quarterly. Figure out what works for you.

Regardless of how often you save, actively try to allocate more funds for your savings over time. Small gains will eventually swell to significant returns in the long run.

Try Self-Directed Retirement Planning Today

As you look for the best way to manage your retirement funds, you may want to convert some of that money to a self-directed IRA. Using these tips, you can choose the right platform and determine what percentage of your savings should be dedicated to the process. Plus, you can return to Benzinga at any time to learn more about retirement and your finances as a whole.

Frequently Asked Questions

Q

How much does a self-directed IRA cost?

A

There is no fixed price tag for SDIRAs. SDIRA custodians usually charge three fees: an application or setup fee, an annual custodian fee and a transaction fee. The price of setting up and managing your IRA ultimately depends on your SDIRA custodian.

Q

Who should get a self-directed IRA?

A

A self-directed IRA isn’t for everyone. Strong background knowledge and extensive experience in IRA investment is a prerequisite. SDIRAs are best suited for investors who fit this profile and aren’t satisfied with traditional investments’ returns or diversification. It is important to note that while investing in alternative investments could potentially return higher profits, the opportunity comes with commensurate risk.

Q

Are self-directed IRAs safe?

A

No investment is entirely safe, and you must do your research before committing your funds to anything. Self-directed IRAs can lose money if you’re not careful, but other self-directed IRAs can perform well.