Investing Beyond the Stock Market: Exploring Alternative Assets

Investing for your future doesn’t have to mean sticking to the traditional stock market. There’s a whole world of opportunities beyond conventional assets like stocks, bonds, and cash. Welcome to the realm of alternative asset investing!

What Are Alternative Investments?

Alternative investments are financial assets that fall outside the standard categories. This includes options like private equity, venture capital, and hedge funds. But it doesn’t stop there – think about notes, performing and non-performing debt, precious metals, and even cryptocurrencies. These assets offer diverse opportunities and can be a great way to diversify your investment portfolio.

Real Estate Syndications/Private Equity

Real estate syndication is a powerful way to get into the property market without going it alone. Here’s how it works: a sponsor or syndicator finds a real estate asset – it could be anything from a commercial property to land for development or a single-family flip. The goal is to generate enough return to pay both themselves and their investors through operational cash flow or profits from resale.

The sponsor often secures institutional financing for part of the purchase and pools funds from private investors to cover the rest. Sometimes, all the money comes from private investors. The sponsor’s job is to find the property, assemble the investment group, and manage the asset. In return, they earn fees and a share of the profits after expenses and loan obligations.

Investing in Precious Metals through an IRA

Not all coins are approved for IRA investments. Only those that are legal tender with 0.9999% fineness are allowed, except for the American Eagle coin, which has a fineness of 0.9167%. Approved coins include:

- American Buffalo

- Canadian Gold Maple Leaf

- Australian Gold Nugget

- Platinum Maple Leafs & non-proof coins

However, the South African Krugerrand, with a fineness of 0.9167%, is not permitted. Gold contributions to IRAs require a minimum purity of 0.995%, but most gold bullion bars meet the 0.9999% standard.

Cryptocurrency

A self-directed IRA gives you more control over your investments. Unlike traditional IRAs that limit you to stocks and bonds, you can diversify with assets like cryptocurrencies. Cryptocurrencies are digital currencies created with encryption algorithms, serving as both a currency and a virtual accounting system.

Debt/Notes

Promissory Notes, whether secured or unsecured, are a popular choice for IRA account holders. You can invest in new Notes or purchase existing ones. A secured Note might be collateralized against residential real estate via a Deed of Trust or Mortgage, depending on the state. If lending to a business, the loan can be secured against the company’s assets via a UCC-1 filing.

For unsecured Notes, a Hold Harmless letter must be signed by the account holder, acknowledging the higher risk of loss. When buying an existing Note, ensure you get an Assignment from the seller to the IRA and, if applicable, a Bill of Sale outlining the purchase price. An amortization schedule might be needed if purchasing for less than face value. Always verify the seller is the current holder of the Note.

Conclusion

Alternative asset investing opens up a wide range of opportunities beyond traditional market assets. From private equity and venture capital to real estate syndications, precious metals, cryptocurrencies, and promissory notes, there are numerous ways to diversify your portfolio. Explore these options and consider how they might fit into your investment strategy. And remember, while uDirect IRA Services, LLC provides valuable education and guidance, always consult with your financial and tax advisors before making any investment decisions.