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Self-directed IRAs could allow retail investors to benefit from upfront tax deduction, portfolio diversification through access to private market assets, long-term growth potential and protection against inflation

May 29, 2025 //  by Finnovate

Self-directed individual retirement accounts (IRAs) allow investors to put their retirement savings in private market assets like real estate, private equity, venture capital and crypto. The demand for self-directed IRAs has steadily grown as it has become easier for retail investors to open these accounts and tap into alternative markets. Anticipated major economic shifts will likely accelerate this trend in investor preferences. Investors concerned about the 2025 economic trends could benefit in several ways by opening a self-directed IRA (SDIRA) for their retirement savings. Tax Advantages: An SDIRA offers the same tax benefits as a traditional IRA: tax-deferred growth and an upfront tax deduction on contributions. Investors can tap into alternative markets while saving on taxes. Diversification: Investors reduce risk and the chance of significant losses by adding uncorrelated assets to a portfolio. A self-directed IRA with alternative assets does so by not having all eggs in the traditional market basket. Long-Term Growth: Many alternative investments offer higher growth potential. While these investments require a long-term focus, they can outperform the stock market over time. Inflation Protection: Alternative assets perform especially well when inflation is high. An SDIRA provides this protection for retirement investors. The coming months will force investors to manage inflation, uncertainty and interest rate risk, a painful combination. Fortunately, modern investment strategies and capabilities are up to the task. Through an SDIRA, investors can tap into alternative markets previously only available to high-net-worth individuals. These other assets provide further diversification and are another hedge against economic risks.

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Category: Robos & Wealth, Innovation Topics

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