With all of the different types of retirement accounts at your disposal, you might be wondering why you should open a private placements IRA. However, private placements IRAs have a lot to offer than other IRA accounts simply can’t match. Here are a few things you should know about private placements IRAs.
They offer more control than typical IRAs
Being able to control what you invest in is one of the hallmarks of a good financial plan. Being able to dictate what you invest in gives you the ability to truly diversify your portfolio. Unfortunately, typical retirement accounts limit their investment options too severely to be able to do this. That’s why having a private placements IRA is such a good idea.
There are a variety of companies that private placements IRA accountholders can invest in that aren’t available by those who invest in traditional or Roth IRAs or even 401ks. These include limited liability companies, limited liability partnerships, C corporations, startup companies, small businesses and more.
Because of the greater flexibility in investment opportunities, investors are in a unique position to take advantage of up and coming ground floor opportunities that aren’t available to other investors, increasing the chances of a big profit.
Private Placements IRAs Offer Greater Rewards
Getting in on the ground floor of a new company or a new idea always provides huge rewards to those who take the chance. However, the reason that most investors don’t take these risks because they don’t have the appetite for it.
The good news is that if you are an investor who is willing to take on greater risks in order to reap the even bigger rewards, a private placements IRA is where you are going to want to invest your money. Taking advantage of innovative new ideas or new companies is a pretty big risk.
As the investor, you are in the driver’s seat when it comes to deciding how much your investment is worth in terms of the percentage of ownership you will receive. And, of course, the more of the company you own, the larger your profits will be when the company does well.
Of course, there are also downsides to taking such large risks. However, the risks can be mitigated by doing your due diligence on the company you are looking to invest in to ensure that their business model is sound and that they are doing the things they need to in order to ensure longevity in the marketplace.
Private Placements IRAs Offer a Hedge Against Loss and Inflation
While it is true that investing in privately held companies is risky, the truth of the matter is that because you are not invested in stocks, your investment is not directly affected by flagging financial markets. Of course, the company you choose to invest in must be able to thrive while others are flagging in order to reap this benefit, being able to disassociate your investments from financial markets is a great way to prevent a total loss of your savings because of another economic downturn.