What Can You Invest in With a Self Directed Roth IRA?

Self-directed Roth IRAs allow investors to invest in assets not typically offered through traditional brokerage firms or banks, with one important caveat – they require an IRS approved custodian who specializes in self-directed IRAs as a custodian – the exact type of investments can vary from provider to provider.

Real estate

Investing real estate with your self-directed Roth IRA means following its rules strictly. Be certain that it’s used for investment only and all expenses are paid through your IRA; no living there or borrowing against it allowed, otherwise this constitutes self-dealing which could incur penalties from the IRS.

Real estate investments offer higher potential returns than traditional financial assets, yet come with greater risk. If you need guidance in selecting appropriate properties to buy, work with an experienced real estate investment firm.


Self-directed Roth IRAs provide greater control and flexibility over your retirement savings account, enabling you to invest in assets such as real estate or precious metals not permitted in traditional IRAs, such as real estate and precious metals. But it is essential that if investing in alternative assets, such as real estate and precious metals, that you adhere to complex IRS regulations regarding disqualified persons and prohibited transactions as doing so can incur additional taxes or penalties from the IRS.

Self-directed IRAs offer another great way to diversify your portfolio and potentially provide higher returns by holding debt instruments such as promissory notes and tax liens, though these investments may be difficult to value and verify in terms of account statements – this may require consulting independent third-party valuation services or researching property assessments.


Self-directed Roth IRAs allow investors to broaden their investment options beyond traditional stocks and bonds by diversifying into alternative assets like real estate, precious metals, private loans or tax liens – providing an excellent way to protect themselves against market volatility.

Before investing in riskier assets using a self-directed IRA, it’s crucial that you fully comprehend its rules. For instance, self-dealing (buying and using assets under your own name) violates IRS rules, while verification from reliable sources such as account statements or price checks is mandatory. Failure to adhere may lead to penalties from both the IRS and state regulators as they void entire accounts and impose fines that can run into thousands.

Money market instruments

Self-directed IRAs give you more flexibility in terms of diversifying your portfolio with alternative investments that may offer higher returns and better protection from inflation.

Before investing in any alternative asset class, be sure to conduct thorough research and pose pertinent questions. It is particularly essential that account statements, prices and values of alternative investments be confirmed and it may also be prudent to decline unsolicited offers of investments.

Be mindful of the complex IRS rules surrounding self-directed IRAs. Failing to abide by them could result in additional taxes, financial penalties and the revocation of tax deferral status for your retirement account. Therefore, consult a tax advisor prior to making any investments.


Self-directed IRAs may provide greater investment flexibility than traditional IRAs, but they come with unique risks. It’s crucial to comply with IRS rules and avoid prohibited transactions – these include investing in collectibles, life insurance policies or real estate – along with precious metals not meeting IRS purity standards or foreign currency.

Deliberately avoid investing in debt instruments like tax liens or loans (or an interest in a loan). Before considering investing, always confirm information provided by custodians and promoters of any given investment opportunity, and seek professional investment advice before proceeding. Keep in mind that selling alternative investments may take longer than trading stocks or ETFs, potentially hindering your ability to meet retirement goals.

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