IRA Non-Recourse Loans & Self-Directed IRAs: What You Need to Know
When it comes to retirement planning, Individual Retirement Accounts (IRAs) offer various options for saving and investing. Two common strategies used by savvy investors are IRA non-recourse loans and self-directed IRAs, both of which are available through First Western Federal Savings Bank in South Dakota. But what are both of these and how do they differ financially?
Read on as we delve into the details of these approaches and highlight the key differences between the two. Learn more about your IRA options with us today!
Self-Directed IRAs
A self-directed IRA allows account holders to have greater control over their investment choices. Unlike traditional IRAs, which limit investments to stocks, bonds, and mutual funds, a self-directed IRA gives you the chance to invest in real estate, precious metals, private equity, and more. This flexibility empowers you to diversify your retirement portfolios beyond the stock market.
IRA Non-Recourse Loans
An IRA non-recourse loan through First Western Federal Savings Bank, however, is a unique financing option that allows individuals to leverage their IRA funds to invest in real estate. Unlike traditional financing, non-recourse loans are structured so that the lender’s only recourse in the event of default is the collateral itself (i.e., the property being purchased). This means that the borrower’s other assets are protected, providing a level of security for IRA investors seeking to use leverage.
What Makes Them Different?
One of the primary distinctions between self-directed IRAs and non-recourse loans in South Dakota is the investment strategy employed. While the former focuses on expanding investment options across various asset classes, the latter specifically enables real estate investments through leverage. Additionally, the risk profiles of these approaches differ, with self-directed IRAs offering more diversification but potentially higher volatility, and non-recourse loans providing leverage benefits but with associated risks.
Plan Ahead With First Western Federal Savings Bank
By carefully assessing your financial goals, risk tolerance, and investment preferences, you can determine which approach aligns best with your retirement strategy and take proactive steps toward building a robust portfolio for the future. Contact First Western Federal Savings Bank now in Rapid City to learn more about our non-recourse loans in South Dakota.