The Little IRA That Could

Estimated reading time: 3 minutes(Last Updated On: October 23, 2019)

A Self-Directed IRA (SDIRA) differs from a standard IRA due to the unique investments it can hold. Unlike standard IRAs which hold publicly traded assets, such as stocks and bonds, a SDIRA can hold a wider scope of investments – such as real estate and private notes. While the freedom and versatility that come with an SDIRA sound appealing for many individuals looking to invest, some worry they do not have enough capital to get started with an SDIRA account. Below we explore real-life examples that prove that as long as you have the relevant knowledge, you have enough capital to begin investing in an SDIRA.

The power of a little IRA

If you are interested in investing in real estate, you may be wondering how a little IRA can help you secure a property. Smaller IRAs, such as a health savings or children’s Coverdell account, can be partnered with larger accounts to create a greater return. For example, a married couple partnering their Roth IRAs with their son’s Coverdell ESA to buy a property. After flipping the house each of the investors saw their percentage of interest returned, with the son’s smallest IRA out of the three netting a $2,500 growth. Combining a little IRA with one or more larger account(s) is just one small example of how a little IRA can achieve incredible growth that perhaps it would be able to achieve on its own.

Education and information

While the above scenario may sound appealing, how would the situation work if you didn’t have larger IRAs to combine with? Another possible scenario involves borrowing money from a larger IRA to fund your investment. However, it is essential you have the right education and information on your chosen investment to be able to secure money and see a positive return. A great example of this is an 18-year-old investor, who had knowledge of the property industry but no capital. When he saw an amazing real estate investment, he borrowed money from an IRA investor after proving he could create a positive ROI. The investment was a success and the 18-year old was able to grow his IRA from almost nothing to a substantial sum, proving that the possibilities for a little IRA are limitless so long as you have the right knowledge.

Taking control

If you have children, performing deals in little IRA accounts can be an effective way to secure capital for your child’s future and education expenses. A recent case study saw a wholesale transaction grow a small $100 IRA investment into $13,000. The client secured a $100 option fee in his daughter’s Coverdell ESA, and the client then sold the option fee to an investor for $13,000. Money from a Coverdell account can be removed tax-free, as long as it is removed for qualified educational expenses. The client took control of his little IRA and saw his investment benefit his child, rather than be taken by taxes.

These examples prove that Little-IRAs-That-Could do exist. With the right information and education on an investment, you have all the money you need to get started – and this is why we are here. For more information on the possibility of little IRAs click here: watch

For more information check out our free webinars offered on our site, or reach out to one of our an IRA specialists today.


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