Self-Directed IRA – Should I Use it to Invest in Real Estate?

Determining whether or not you should invest your self-directed IRA assets into real estate can be challenging. It clearly depends on how much of your net worth is tied up in real property. I have read articles saying that everyone should have 20% to 30% of their investments in real estate. Now I’m not going to prescribe a specific percentage. Each person has their own comfort zone. But certainly everyone should have some form of real property investment, even if it is a real estate investment trust (”REIT”).

Not only is real estate a great investment, but it is less volatile than stocks and is also negatively correlated to stock market returns. But because it is generally actively managed, many folks may not have the stomach for it. So determining whether you should hold real estate in your IRA depends, in part, on your overall portfolio mix and your temperament. (more…)