7 Alternative Investments You Can Hold in a Self-Directed IRA

When most people think of retirement accounts, they think of traditional investments such as stocks, bonds, and mutual funds. But what if you could use your retirement savings to invest in real estate, farmland, private companies, or even precious metals? With a Self-Directed Individual Retirement Account, you can.

A Self-Directed Individual Retirement Account (Self-Directed IRA) is a type of retirement account that allows you to invest in a much wider range of assets than a regular Individual Retirement Account. The Internal Revenue Service allows it, but most big banks and brokerage firms do not offer it because it requires more specialized administration. With the right custodian, however, you can diversify far beyond the stock market.

Here are seven alternative investments you can hold in a Self-Directed Individual Retirement Account — and why they might help you build a stronger, more resilient retirement portfolio.

1. Real Estate

Real estate is one of the most popular assets held in Self-Directed Individual Retirement Accounts. You can invest in single-family homes, apartment buildings, commercial properties, or even undeveloped land.

The benefits? Real estate can provide both long-term appreciation and rental income. Over time, property values tend to rise, and tenants’ rent payments can generate steady cash flow. It is also a tangible asset that does not depend on the stock market for its value, making it a strong diversification tool.

2. Farmland

Farmland is one of the oldest and most stable asset classes in history. People will always need food, and agricultural land has historically held its value even during economic downturns.

Investing in farmland through a Self-Directed Individual Retirement Account can provide income from crop sales or leases to farmers, along with potential long-term appreciation as farmland becomes more scarce. It also acts as a natural hedge against inflation because food prices typically rise when the cost of living increases.

3. Private Businesses

You can invest directly in privately owned companies through your Self-Directed Individual Retirement Account. This might include start-ups, family businesses, or established private companies looking for expansion capital.

This option carries higher risk than more traditional investments, but it also offers the potential for much higher returns — especially if the business grows significantly or is acquired by a larger company.

4. Precious Metals

Gold, silver, platinum, and palladium are all allowed investments in a Self-Directed Individual Retirement Account, as long as they meet specific Internal Revenue Service purity standards.

Precious metals are considered “safe haven” assets because they tend to hold or even gain value during times of economic uncertainty or market volatility. They can also help protect your retirement savings from inflation.

5. Secured Notes and Lending

With a Self-Directed Individual Retirement Account, you can act as the lender instead of the borrower. This means you can issue secured loans to individuals or businesses, often backed by collateral such as real estate.

These loans can provide regular interest payments, creating a passive income stream for your retirement account. As with any loan, it is important to conduct due diligence and ensure the borrower and collateral are reliable.

6. Tax Liens and Tax Deeds

When property owners fail to pay their property taxes, local governments can place a lien on the property or eventually sell the property through a tax deed sale. Investors can purchase these liens or deeds, often at a discount.

If the owner repays the overdue taxes, you earn interest. If they do not, you may be able to acquire the property itself. This is a more advanced investment strategy, but with proper research, it can yield high returns.

7. Cryptocurrency

While still considered speculative, some Self-Directed Individual Retirement Accounts allow investment in digital assets such as Bitcoin and Ethereum. Cryptocurrencies can be highly volatile, but they have also experienced significant growth over the past decade.

If you believe in the long-term potential of blockchain technology and digital currencies, holding cryptocurrency in a Self-Directed Individual Retirement Account can allow you to capture future upside in a tax-advantaged way.

A Self-Directed Individual Retirement Account opens the door to an entirely new world of investment opportunities. By going beyond stocks and bonds, you can diversify your portfolio, protect yourself from market volatility, and potentially achieve higher returns.

However, these investments also require more due diligence. Unlike a regular Individual Retirement Account, you are fully responsible for researching opportunities, understanding the risks, and following Internal Revenue Service rules.

If you want true diversification and greater control over your retirement future, a Self-Directed Individual Retirement Account could be the key to unlocking it.