What is a Self Directed IRA?
A self-directed IRA is no different than any other IRA. Having a self-directed IRA simply means you are allowed to direct the investments of the IRA.

Use your IRA to invest in Real Estate
Very few Americans realize that they have the option to self-direct their IRAs and other retirement plans into real estate, and benefit from the tax advantages those plans provide. If you currently are a successful real estate investor, or are just looking to diversify your retirement portfolio, the combination of real estate and your IRA can be very powerful.

Tax Advantages
Investments in IRAs benefit from tax-deferred profits or in some cases tax-free profits. Imagine not having to pay taxes right away, or ever, on your real estate deals. Instead of paying 25%, or 30%, or even 50% of your profits to the government in taxes, you get to keep it.

The Effect of Taxes on Your Money
Let’s look at a simple, real world example. If you were to contribute $4,000 a year to an IRA and assume an 8% rate of return for 30 years, yourself directed IRA would be worth $449,133 at the end of year 30. If you made the same investment in a non-tax sheltered environment, assuming a 31% tax rate, it would be worth $286,752 instead of $449,133. That is 43% less, a difference of $162,381 (as shown in the chart below).

Self Directed IRAs and the Power of Compounding Interest
How does it work? The power of compounding interest comes from the fact that the original investment, as well as the income derived from that investment, is re-invested. Compounding interest can be especially dramatic when the effect of taxes is removed from the equation. Do you know how much money you would have in 30 years if you invested just one penny today and doubled it every year? The answer will astound you: it is $10,737,418! Now, suppose you had to pay taxes of 31% on your investment? Over the same 30 years, you would have only $68,644. Obviously, no one can expect to double an investment every year for 30 years. Nonetheless, this example certainly illustrates the combined effects of compound interest and taxation.

Where can I get a Self Directed IRA?
I personally use “Equity Trust Company” but I also hear a lot of people use “Pensco Trust“. A lot of my information came from these two companies web sites and offer even more great resources. In fact Pensco’s web site offers a weekly radio show that invites other investors on to speak about how they invested their self directed IRA’s. I have searched the web for other companies and found GuidantFinancial, Sunwest Trust, and Bank Of Amercia just to name a few. Im sure with a more extensive Google search you can find more. But the most popular to me seems to be Pensco Trust and Equity Trust Company.