Lessons Learned Everyday: Investing with your IRA

I learn something (usually multiple things) new everyday. Most days they revolve around tech, new startups, life and other useful subjects but yesterday I learned something very interesting from one of our investors. You can use your IRA (retirement savings) to invest in private equity and that means, someone's startup! That's some pretty cool news for both sides of the table.

That's a weird investment choice, no?For the investor: There are lots of ways to blow invest your money. Most people put their savings into stocks and bonds on the public market because it's simple to do. If you've got the right IRA you can invest in almost anything you want! Real estate, restaurants, films and even cemeteries (if you really want to) are all allowed by the IRS and you get the same benefits that you would from investing in the public market. There are some things that you can't invest in like artwork, jewelry and life insurance and limitations on who can own the company (no cheating the system) so make sure you check with your IRA's administrator and accountant before you do anything.

For the entrepreneur: This could blow the doors wide open for seeking family and friends investments. You can now talk to Grandma or Aunt Sue about using their retirement funds to help you get rich and become successful (and hopefully give them a return on their investment). Many times while people raise money for their startup they only focus on the normal investment types such as VCs, angel investors and very wealthy friends of the family. That's not the only place to beg ask for money.

There is one hitch along the way. Investors in your company still need to be accredited as defined under the Securities Act of 1933. This means that this option may not be available to everyone you know. And most important be sure to act responsibly as you raise funding and more importantly, as you build your business. Otherwise you may not get a birthday or Christmas gift next year.

You can find out more information about how all of this works at CNNMonday, Entrust New Direction IRA and by reaching out directly to your IRA administrator or financial planner.

Comments

[Brian]

Very interesting!

[Jesse Middleton]

So Brian, any plans to invest in a company now from your IRA? :) There are some kick ass businesses out there.