Self-directed IRA: an investment option where you make the calls

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SALT LAKE CITY -- If you're like many people, you probably hold your breath every time your monthly IRA statement arrives. Those investments have certainly taken a beating in the last few months. But there's a little known IRA out there that might make you smile the next time that statement arrives in the mail.

They're called "self-directed" IRAs and just like the name suggests, you get to call the shots as to where the money is invested.

When the economy started spinning downward late last year, Bank of Utah noticed something: a spike in the number of customers who wanted to set up "self-directed" IRA accounts.

Roger Tidwell, senior trust officer for Bank of Utah, said, "In the last six to seven months, we have seen about a 15 percent increase in our business, and we think we're going to see more of that."

Self-Directed Individual Retirement Accounts have been around since 1974, but not every financial institution offers them.

Unlike traditional IRAs, where your investment options are limited; self-directed IRAs allow a broader range of investments and you make the call.

Tidwell explained, "You direct us, and tell us what types of things you want to invest in."

You can invest in anything from undeveloped land to mortgages, commercial properties, personal loans, trust deed notes and more.

Dennis Simpson has been self directing his IRA for about 20 years. He invests primarily in the real estate area, and he has no complaints. He said, "Extremely well, especially the last couple of years. I have a lot of friends invested in the stock market, and they've ended up losing 50 percent of what they've got in there, and my IRA account hasn't been affected a bit."

With investors still skittish about their money, especially their retirement nest eggs, many want to be more hands-on. Only about 4 percent of all IRAs are self-directed, but Bank of Utah executives expect that to change. "The so-called industry experts, in the next two years, they expect two trillion dollars to flow into these types of accounts, now that's huge," Tidwell said.

And the tax advantages with these self-directed IRA's are the same as with traditional IRAs. By the way, these IRAs aren't for the novice investor, you need to know what you're doing or have a good adviser with the expertise to help you. But it is another investment option.


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Keith McCord


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