According to Equity Trust Company: Fraud, Mismanagement, and Performance Complaints are Moving People to Explore Self-Directed IRAs

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Passive custodian educates consumers about retirement strategy few Americans are aware of.

Equity Trust Company
Self-directed IRAs combine the power of tax-advantaged accounts with the freedom to invest in alternative assets.

Once a little known financial strategy option, self-directed IRAs are gaining visibility as a way to have more control over the growth of retirement funds. While self-directed IRAs allow consumers to use their knowledge and expertise to invest in assets beyond stocks, bonds and mutual funds, they may not be the best option for everyone. A self-directed IRA requires the account owner to take a stronger hands-on approach and play an active role in the investment process. The ability to diversify, potentially earn greater returns and invest in areas of personal financial success often require investors to commit to the effort needed to reap these rewards.

For consumers curious about self-directed IRAs, such as plans offered by Ohio-based IRA custodian Equity Trust Company, it’s important to understand these accounts are not a different type of IRA. Traditional IRA or Roth IRAs follow the same rules and guidelines set by the IRS whether they are held at a custodian who can only hold “conventional” investments or a company such as Equity Trust Company who can provide for clients who want conventional or alternative investments.

Self-directed IRAs combine the power of tax-advantaged accounts with the freedom to invest in alternative assets. Investors can truly diversify their portfolios and potentially generate greater returns than typically seen with conventional investment options. While conventional IRA investments are primarily defined as publicly traded stocks, bonds or mutual funds, alternative investments can be loosely defined as ”everything else” the IRS doesn’t list as prohibited. Alternative investments can range from real estate, tax liens and shares of private equity to heavy equipment, windmills and even cattle. While these assets are sometimes considered “non-conventional,” they are simply investment opportunities many investors take advantage of every day using their personal, non-IRA funds.

Since self-directed IRAs allow for a wider range of investment options, they can sometimes be tempting targets for fraudulent schemes. It’s vital to understand that while IRAs are administered by custodians and fall under the tax code; this does not mean an investor can make an assumption about the quality or legitimacy of assets. Not all custodians are permitted to evaluate assets or potential investments. Passive custodians, which often hold self-directed IRAs, do not sell investments or provide tax, legal or investment advice. The IRS can provide educational material, such as Publication 590 for IRAs, but does not endorse or review investments. This aspect is also true for passive custodians, who may offer seminars or other types of educational resources but are prohibited from providing investment guidance.

Equity Trust Company’s fraud awareness center helps give investors a starting point when it comes to watching out for con artist schemes, fraud and other scams. According to the U.S. Securities and Exchange Commission, U.S. investors held around $94 billion in self-directed IRAs in 2011; given the size of these funds, it is in the best interest of investors to always thoroughly investigate potential opportunities before committing to any investments.

About Equity Trust Company

Equity Trust Company, with its corporate headquarters in Greater Cleveland, Ohio and operations in Waco, Texas and Sioux Falls, South Dakota, is at the forefront of the self-directed retirement plan industry. The Company specializes in the custody of alternative assets in self-directed IRAs, Coverdell Education Accounts, Health Savings Accounts and qualified business retirement plans. Along with its affiliates, Equity Trust Company provides services to more than 130,000 individuals and businesses nationwide with approximately $12 billion in assets under custody. Since 1974, the company and its affiliates have helped investors make tax-free profits through education, innovation, and a commitment to understanding individual needs. Visit http://www.trustetc.com/ for more information.

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Westley Stump
Equity Trust
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