Ask the IRA Expert: I Want to Start Self-Directing, but I Don’t Have an Investment Lined Up Yet

By John Bowens0 Comments


John, I want to start self-directing, but I don’t have an investment lined up yet. Does it make sense to wait until I see an opportunity before I move my funds over?
~Jason P.


Thanks for your question, Jason.
This is a common reason many investors hesitate to open a self-directed IRA, even when they are interested in alternative assets and self-directing investing. Not having a deal ready, may, at first glance, appear to be a lack of urgency. After all, you may as well let your retirement funds sit in a mutual fund until you’re ready for more active investing; at least, that’s their mentality. The problem with this, of course, is that a great opportunity can arise when you least expect it and then it may be too late to act upon that potential deal in time. I’ve heard from many of our clients that a great opportunity can pass them by, even when they do have their ducks in a row, simply because they didn’t act quickly enough. If you throw in the extra steps of opening an account, moving your funds, and having the necessary time for the funds to settle, then you have less time to act on the deal.
The best thing to do is to be realistic. Whether from another custodian or a 401(k) administrator, transferring funds takes time. There have also been occasions where a custodian has dragged their feet a bit with the transfer process. They’re not always in a rush to let go of your money. You have to allow for the time necessary to roll these funds over and for the account to open. If you’re interested in self-directed investing, don’t wait until you’ve found a deal. Get your account open, get your funds moved over, and get yourself educated so you feel comfortable grabbing that excellent deal as soon as it comes along. There’s a lot more to be said on this topic, but I hope that answers your question for now.
Thanks again for your question, Jason and good luck!

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