Putting your IRA account to work

October 25, 20166 min read
Putting your IRA account to work
Share on facebookShare on TwitterShare on Linkedin

If you’ve spent any time looking at the plight of America’s seniors, or pondered how you’ll fund your own golden years, you probably gathered that trying subsist on Social Security payments alone is not an optimal retirement plan.

So how do you make your money work for you? How do you make sure you get gains from the savings that you put into retirement over time?

A retirement account is a way to invest pre-tax income to get tax-deferred growth. Instead of having your earnings reduced by income tax, the IRS allows people to use retirement accounts to allow that money to grow tax-free.

There are a number of available retirement account options, each with its separate advantages and restrictions. It is important to understand the differences between the different options.

Post-taxRoth IRARoth 401(k)

Retirement accounts can be individual (IRA, Roth IRA) or employer-sponsored (401(k), Roth 401(k)). They can also differ on how they are taxed – before contribution (post-tax) or when withdrawn (tax-deferred). There are also a number of lesser-known retirement accounts like 403b, SEP, and TSP.

A 401(k) is an employer-sponsored plan. Employers sometimes match funds, setting different limits or restrictions for how employees can grow their savings through investments. When someone leaves a job, a 401(k) can usually be rolled over into a traditional IRA.

Some investors choose to mix and match employer-sponsored and individual retirement accounts to maximize their tax-free earnings and benefits.

If an employer offers to match 401(k) contributions, individuals should generally contribute enough to get the full match. After exhausted, they may choose to contribute additional money to their 401(k), or choose to contribute to an IRA. The primary driving points in that decision should be the management fees and the individual’s income. Those whose high income does not qualify them for the benefits of an IRA generally choose to max out their 401(k) contribution before contributing to an IRA account. Those who are eligible for IRA benefits are better off contributing enough to get the employer match on a 401(k), then starting to contribute to an IRA.

It is important to keep track of restrictions and contribution rules to each account. Find out more about employer-sponsored and individual retirement plans here.


Types of IRAs

IRAs are retirement accounts typically used by individuals who don’t have a 401(k) or employer-backed plan. Although IRAs for self-employed people and others don’t get matching funds from employers, their primary advantage is that they often have more freedom in terms of investment options.

There are two different types of IRAs that are taxed differently—a regular traditional IRA, as mentioned above, has taxes taken out when money is withdrawn in retirement, or whenever the account holder dips into it. A Roth IRA, on the other hand, is taxed as the individual contributes, so that they can take out the gains without further taxation.

Choosing a retirement account

When it’s time to choose an IRA, investors can look at things like their age, employment status, and appetite for risk. Those who are employed by a big company with matching funds may choose their 401(k)s to be the primary vehicle. Investors who have been self-employed most of their lives might choose the traditional IRA. As an individual nears retirement and has a better idea about their future earnings, they might choose to contribute to a Roth IRA to have their money taxed upfront. This page from Investopedia goes into the details of the differences between Roth and traditional IRAs.

Many investors are choosing self-directed IRAs because they give them more freedom in the types of investments they can add to their portfolios.

Self-directed IRAs

Many conventional IRAs are managed by an “IRA custodian” such as a brokerage who can set restrictions on what types of equities, funds or other products the IRA can invest in. A different type of IRA account, called a self-directed IRA, is truly an open book when it comes to investment opportunities.

With a self-directed IRA, there are very few limits, leaving investors free to try to find options that are less mainstream.


Where to invest your IRA account

For those with traditional IRAs, many of the questions on where to invest are answered for them. An employer or custodian may only allow them to trade in certain stocks and equities or in various types of funds or bonds, with occasional opportunities in a real estate investment trust or another type of fund.

Self-directed IRAs offer a wider range of investment options, including alternative investments, which can be a great way to diversify an investor’s portfolio. Read more about portfolio diversification here.

For instance, instead of just buying into a single real estate investment trust or REIT, account holders can invest in baskets of properties, property liens, or other kinds of real estate investment vehicles. They may put money into an unusual piece of real estate, such as a vacant lot, a small parcel of land, or a dormant commercial property with future value.

The investment choices don’t end there. More investors are making choices that fall outside of the traditional spectrum. Instead of individual stocks, IRA holders might invest in different kinds of commodities and assets that are not on any traditional market exchange.

There’s also the potential to use alternative investments to get great returns—and in some cases, investors can earn high yields without taking on a higher risk of principal loss.

Traditional investment philosophy holds that risk always affects return—the more risk you take, the more potential there is for a higher return. But the equation can prove to be too simplistic with alternative investments. A major benefit of these more unique types of investments is that savvy investors can make their money work in more sophisticated ways.

Alternative investments are investments that don’t fit a particular easy label or category. “Alternatives” is an umbrella term that covers different types of alternative asset classes, from a high-end art collection to real estate, to litigation finance, and clean energy.

In many cases, alternative investments have risks around timing and payout terms. For example, payments from a litigation finance opportunity may not follow a specific amortization schedule but will be event-based, depending on when the cases in the portfolio settle. This risk, though potentially inconvenient for an investor, does not directly affect their chance of principal loss. Read more about the risks of alternative investments here.

Alternative investments may offer investors the chance to invest more wisely and creatively for a chance to get more gain.

At Yieldstreet, we are dedicated to helping investors find new value. Ask us how to pursue Yieldstreet’s alternative investments with self-directed IRAs.

This communication and the information contained in this article are provided for general informational purposes only and should neither be construed nor intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Any link to a third-party website (or article contained therein) is not an endorsement, authorization or representation of our affiliation with that third party (or article). We do not exercise control over third-party websites, and we are not responsible or liable for the accuracy, legality, appropriateness or any other aspect of such website (or article contained therein).

We believe our 10 alternative asset classes, track record across 470+ investments, third party reviews, and history of innovation makes Yieldstreet “The leading platform for private market investing,” as compared to other private market investment platforms.

1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

3 "Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. “Term" represents the estimated term of the investment; the term of the fund is generally at the discretion of the fund’s manager, and may exceed the estimated term by a significant amount of time. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

4 Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

5 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

6 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments, excluding our Short Term Notes program, weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 18th, 2022, after deduction of management fees and all other expenses charged to investments.

7 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Alternative Income Fund before investing. The prospectus for the Yieldstreet Alternative Income Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetalternativeincomefund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

8 This tool is for informational purposes only. You should not construe any information provided here as investment advice or a recommendation, endorsement or solicitation to buy any securities offered on Yieldstreet. Yieldstreet is not a fiduciary by virtue of any person's use of or access to this tool. The information provided here is of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of this information before making any decisions based on such information.

9 Statistics as of the most recent month end.

300 Park Avenue 15th Floor, New York, NY 10022


No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by YieldStreet Management, LLC pursuant to a written advisory agreement between such entity and the recipient. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.

Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.

Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.

Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and are willing and able to accept the high risks associated with private investments.

Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.

YieldStreet Inc. is the direct owner of Yieldstreet Management, LLC, which is an SEC-registered investment adviser that manages the Yieldstreet funds and provides investment advice to the Yieldstreet funds, and in certain cases, to retail investors. RealCadre LLC is also indirectly owned by Yieldstreet Inc. RealCadre LLC is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Information on all FINRA registered broker-dealers can be found on FINRA’s BrokerCheck. Despite its affiliation with Yieldstreet Management, LLC, RealCadre LLC has no role in the investment advisory services received by YieldStreet clients or the management or distribution of the Yieldstreet funds or other securities offered on our through Yieldstreet and its personnel. RealCadre LLC does not solicit, sell, recommend, or place interests in the Yieldstreet funds.

Yieldstreet is not a bank. Certain services are offered through Synapse Financial Technologies, Inc. and its affiliates (collectively, “Synapse”) as well as certain third-party financial services partners. Synapse is not a bank and is not affiliated with Yieldstreet. Bank accounts are established by Evolve Bank & Trust. Brokerage accounts and cash management programs are provided through Synapse Brokerage LLC (“Synapse Brokerage”), an SEC-registered broker-dealer and member of FINRA and SIPC. Additional information about Synapse Brokerage can be found on FINRA’s BrokerCheck. By participating in a Synapse cash management program, you acknowledge receipt of and accept Synapse’s Terms of Service, Privacy Policy, and the applicable disclosures and agreements available in Synapse’s Disclosure Library.

Investment advisory services are only provided to clients of YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.

Read full disclosure