Financial Independence: It is Possible with a Self-Directed IRA

Published on November 4, 2021

You’re in a rewarding career, you enjoy what you do, and you have a professional development path laid out… GREAT! But while working towards a promotion, more responsibility and a pay raise is only part of the picture for people in the early years of their careers. Working toward financial independence should be part of your life plan as well.

Jamila Souffrant, founder of the Journey to Launch podcast, Budget Bootcamp and the Money Launch Club, is not yet 40 years old, but she and her husband have unlocked saving and investing strategies that helped them save a significant amount of money in just two years.

We’ve written before about FIRE—Financial Independence, Retire Early. Souffrant counsels that her model is not so much about retiring early, but more about enjoying the flexibility that financial independence offers. She says that focusing on that first part of FIRE—the financial independence—led her and her husband to explore new ways to get smarter with their money. Having the option to not work for other people and the ability to explore entrepreneurial avenues of interest are among the benefits of that financial freedom. Her “Journey to Launch” program includes five steps on that path:

• Explorer – targeting financial stability and identifying opportunities to improve finances
• Cadet – working on your consumer debt
• Aviator – debt is reduced, financial stability is attained, and you have more discretionary income to save and invest
• Commander – work-plus-stability, in that you have some freedom around when to work, how much, or where to spend some of your budget differently
• Captain – financial independence to the point where if you don’t want to work again, you can live off investments and passive income

Souffrant also recommends getting a start on investing as early as possible. And with a self-directed IRA, you can become the captain of your own financial ship in more creative ways beyond simply investing in the stock market.

Put a self-directed IRA on your path to financial independence

Anyone can get started with a relatively small amount to fund a self-directed retirement plan—and you may already have the insights and know-how about investing in alternative assets, which is the foundation for building a more diverse (and potentially more powerful) retirement portfolio.

Perhaps your current job has provided you insights and experience in real estate, private equity, hedge funds, precious metals, cryptocurrency, or any of the myriad nontraditional investments allowed through self-direction. Or perhaps you are already investing in these assets outside your existing retirement plan, so you already know and understand how those investments work. If so, self-direction can be a way to fast-track your way to financial independence.

Be the captain of your financial ship

Self-direction enables individuals to take control of their financial futures by choosing their own investments of interest. Through alternative investing in a retirement account, these individuals also maintain a hedge against stock market volatility by investing in real estate, precious metals, private equity, notes/loans, cryptocurrency, and many more alternative assets. And a self-directed IRA is a tax-advantaged vehicle, so earnings grow either tax-deferred or tax-free (if using a Roth IRA). If you are a business owner, you may even be able to self-direct a workplace retirement plan, such as a 401(k)or other qualified plan.

While you may wish to work for decades more, why not consider ways to reach your financial goals on the earlier side of retirement age? If you have questions about self-direction as a wealth building strategy, the team at Next Generation is here to help. You may can schedule a complimentary education session with one of our specialists; or contact us by email at NewAccounts@NextGenerationTrust.com or by phone at 888.857.8058.