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Fresh alternative asset insights and the latest news on real estate and private equity investing.

Private Equity as a Pathway to Retirement

A Scenic Road with a Setting Sun

  |  By Christopher Orr, SDIP

As a Relationship Manager at PENSCO, a big part of my job is helping our clients navigate the ins and outs of holding private equity in a self-directed IRA account. I work with them to make sure they understand the rules and nuances, including things like prohibited transactions. My objective is to make the process as smooth as possible, so that clients can spend their time thinking about the next investment opportunity rather than worrying about the administrative details.

Markets have weathered quite a storm since 2008. As a result, more and more investors are taking their retirements into their own hands by using self-directed IRAs to “invest outside of the box.” Unlike traditional retirement accounts, self-directed IRAs allow investors to use tax-advantaged money to buy “alternatives” – non-exchange traded investments like like real estate, precious metals and private equity.

With so many investors dissatisfied with the performance of their stock investments, it’s no wonder that a growing number are turning to private equity to seek diversification and potentially greater returns. Whether it’s the thrill of trying to discover the next big company or the fact that this category has outperformed the stock market over the past 10 years*, the benefits of private equity investing are becoming more widely known.

And a growing number of investors are learning that these benefits can multiply when they use a self-directed IRA to invest in private equity. Self-directed IRAs allow investors to use tax-advantaged funds to hold everything from private corporate stock to hedge funds to limited partnerships. In a traditional self-directed IRA, investors can defer capital gains taxes until it’s time to take distributions, while in a self-directed Roth investors can avoid taxes on distributions.

Of course, all investments come with their risks, and private equity is no different. It’s crucial to do your due diligence on any investment opportunity or work with a financial professional whom you trust. And when you’re ready to take the plunge, that’s where I come in.

I’ll be sharing some of my insights about private equity investing and self-directed IRAs here on the blog on a regular basis. If you have specific questions, please comment below and I’ll try to address them.


*Source: Private Equity Growth Capital Council as of 6/30/12.

The PENSCO blog does not provide investment, tax, or legal advice nor does it evaluate, recommend or endorse any advisory firm or investment vehicle. Investments are not FDIC insured and are subject to risk, including the loss of principal.