Private Equity That Offers Risk-Adjusted Returns
Updated: Feb 22
Savvy investors understand the potential that private equity investment can deliver significant returns. Assets held in a tax-advantaged IRA and having a portfolio with private equity real estate-backed funds can offer compelling returns for many looking to capitalize on retirement accounts with Wall Street-based assets.
Looking to hedge against stock market volatility?
Private equity real estate is a long-term investment that offers investors price appreciation, passive income streams, and tax breaks with the flexibility of re-investment. Many earn the nest egg they need through their retirement accounts bound by ETF's and stock that may or may not perform well in the long term.
Real estate can deliver higher-yielding returns and preserve wealth through volatility through a self-directed individual retirement account (SDIRA). These accounts have shown various investors to generate better risk-adjusted returns. Yet, we usually still keep our nest egg in accounts that lack to ability to expand our investment interests.
What's a Self-Directed Individual Retirement Account?
A Self-Directed Individual Retirement Account (SDIRA) lets investors expand to a variety of investment choices to provide alternatives to traditional investing and offers portfolio diversification for the savvy investor.
"The great investment opportunity for those interested in converting their existing IRA or 401K assets to an SDIRA is the ability place investment earnings back into their existing IRA account tax-free," Surf Dinani, CEO of Veloce Capital adds,
"What investors with retirement accounts should be asking themselves is how can I enter into higher-yielding investments while protecting my nest egg?"
Critical Points in Comparing Self-Directed IRAs to conventional IRAs:
Self-directed IRA investments are not limited to stocks, bonds, and mutual funds.
Self-directed IRAs can invest in a large pool of alternative assets not available in brokerage IRA accounts.
Access to higher performing returns.
"Our Real Estate backed fund has had a consistently higher rate of return compared to traditional IRA performance." "Why wouldn't you want to capitalize on an investment you believe in with a real estate-backed SDIRA?" asks Surf Dinani.
Who is an Accredited Investor in private equity?
Accredited Investors came into existence after the Security & Exchange Commission (SEC) moved to protect the economy after the 1929 stock market crash.
To obtain this status, you must demonstrate a certain degree of financial sophistication and wealth:
Individuals who have an income higher than $200,000 in each of the past two years or whose joint income with a spouse is greater than $300,000 for those years, and a reasonable expectation of the same income level in the current year
Individuals who have an individual net worth or joint net worth with the person's spouse that exceeds $1 million at the time of the investment (The net worth amount cannot include the value of the person's primary residence.)
Accredited Investors enjoy the benefits of gaining access to unique investment opportunities not available to non-accredited investors, high returns, and increased diversification in your portfolio.
These benefits give the savvy investor and those looking to enter this accreditation the diversification afforded in real estate-backed private equity. Leveraging an SDIRA account to invest, accredited investors can shield liquidity offset through investing IRA-based funds in high-yielding funds.
How to transfer IRA funds to an SDIRA account through trusted channels
A self-directed IRA is a custodian or administrator that allows you to invest in many different types of alternative investments. Please know that custodians do not provide investment advice. Investors are on their own to perform the necessary due diligence on investment options. The new custodian, with your consent, requests the transfer of IRA assets from your existing IRA custodian in a tax-free and penalty-free IRA transfer. Once the IRA funds are either transferred by wire or check tax-free to the new IRA custodian, the new custodian will be able to invest with the SDIRA assets as you, the manager.
In vetting custodians, look for an established track record as trustee and investigate the organization's staffing and fee structure. Once an investor is comfortable with the custodian and how it operates, setting up the account takes only a few minutes.
Putting it All Together
Private equity investments through real estate-backed funds are one of the more popular investment options for Self-Directed IRAs. Having a good alignment with an IRA custodian and a trusted Private equity investment manager can provide the opportunity to access high returns and diversification for accredited investors.