If you have a retirement account at a traditional brokerage such as Fidelity, Schwab, E*TRADE, or Vanguard, you’ve probably noticed that your investment choices are limited to stocks, funds, and bonds. This limitation isn’t because of some law. It’s a restriction imposed by financial institutions. After all, financial institutions sell financial products.

What if you want to invest in something outside of stock market securities? That probably isn’t going to happen at a traditional financial brokerage. You’ll typically have to move your funds into what’s called a self-directed IRA (SDIRA).

The best self-directed IRA providers are most likely separate companies from the financial institution where your retirement is now. But once you open a self-directed IRA, you’ll have far more freedom to invest in what’s called alternative assets. Keep reading to learn more about how they work and the top providers available today.

Modern Day Alternative Asset Investing

A few years ago, if you wanted to get involved with alternative assets, you had to find someone selling that particular asset. It could be a very time-consuming process. And once the transaction was completed, the investment holding period was typically a few years since many alternative assets are rather illiquid.

Finally, the investor was required to be an accredited investor, which means an income of $250,000 for the last two years or a net worth of $1 million, not including the primary residence. If that isn’t enough of a high bar, alternative assets generally require a high initial investment that can start in the hundreds of thousands.

Then along came crowdfunding and new methods of investing in alternative investments. The modernization of investing in alternative assets reduced the holding periods, lowered initial investment minimums, and no longer requires investors to be accredited.

Lowering the barrier to entry for alternative investments has grown the self-directed IRA market. It is far easier to use a retirement account for investing in alternative assets than in the recent past.

What Is A Self-Directed IRA?

A self-directed IRA is a custodian or administrator that allows you to use your IRA as you see fit. This means you have the ability to invest in alternative assets. Alternative assets include gold, real estate, startups, Bitcoin, and more. The custodian is passive, meaning they do not guide or restrict your choices (as long as your investments are legal).

Besides being able to invest in alternative assets, a self-directed IRA retains its tax advantages. Say you purchase a $100,000 property and sell it for $150,000. That $50,000 gain would normally generate a sizable tax bill. But in a self-directed IRA, you may no taxes on this profit. Just like stock gains inside a typical IRA, those gains are tax-sheltered.

But you must be careful to follow the rules and not create a taxable event. It’s best to work with your tax advisor when investing in alternative assets. As a side note, you can still invest in stocks, funds, and bonds with a self-directed IRA. You aren’t restricted to only alternative assets.

Related: These Are The Best Self-Employed Retirement Investment Plans

Our Picks Of The Best Self-Directed IRA Providers

To set up a self-directed IRA, you’ll need to first choose a self-directed IRA provider. It does take some time to set up a self-directed IRA and transfer funds from your brokerage. You’ll want to keep this in mind if you're planning to invest in any alternative investments in the near future.

Speak to both your traditional IRA broker and the self-directed IRA provider about timelines and coordination. Here are some of the best self-directed IRA providers available today.

Alto

Alto’s self-directed IRA is called The Alternative IRA (TM). You can use the following IRAs with Alto — traditional IRAs, Roth IRAs, and SEP-IRAs. A rollover retirement can be converted into a traditional IRA. 401(k)s are not allowed.

There are two categories of investments with Alto — direct and Alto IRA’s partners. Direct investments are made without any involvement from Alto partners. This might be direct real estate and investing in a startup. Read our full review of Alto IRA.

Directed IRA

Directed IRA is an Arizona-based trust company with over $1 billion in assets under custody and more than 10,000 client accounts. According to Directed IRA, you can use your self-directed IRA to invest in real estate, private companies and private funds, checkbook IRA/LLCs, notes, cryptocurrency, and other alternative assets.

Directed IRA offers simple pricing, with a low annual fee of $395, regardless of your account balance or the number of assets you hold. There is a one time new account fee of $50.

Equity Trust

Equity Trust is one of the oldest self-directed IRA providers still doing business today. It's been around since 1974 and started allowing its customers to invest in real estate through their IRAs in 1983. It offers a broad range of alternative investment choices, including:

• Real estate
• Promissory notes/lending
• Private Equity
• Stocks and funds
• Precious metals
• Cryptocurrencies
• Foreign currencies

IRA Resources

IRA Trust Company is a self-directed IRA custodian. It charges a low annual fee of $199 for the first asset ($75 for the second asset), so the fees don't grow with the value of your account.

With IRA Resources, you can invest your self-directed IRA in real estate (rental properties, single- and multi-family homes, commercial and international property, mortgage notes, and real estate investment trusts (REITs). You can also invest in private placements, equity and stocks, promissory notes, and other alternative investments.

Madison Trust Company

Madison Trust Company is chartered in South Dakota, with administration offices in Montvale, New Jersey. It allows you to hold the following assets in your self-directed IRA: Real estate, promissory notes, private placements, precious metals, and startups & crowdfunding.

It charges a one-time setup fee of $50, and $105 per quarter to maintain your account. The company has over $4 billion in assets under custody as of February 2024.

New Direction

With offices in Colorado and Hawaii, New Direction Trust Company oversees more than $3 billion in cash and assets, and 51,000 accounts. With a New Direction self-directed IRA, you can invest in stocks and bonds, and the following alternative assets: Real estate, private equity, private lending, precious metals, timber, oil/mineral rights, livestock, and more.

You can open the following account types: Traditional, Roth, Simple, Inherited, and SEP IRAs, Health Savings Accounts, solo 401(k), and a Coverdell Education Savings Account (ESA). New Direction charges a flat fee of $335, regardless of account size.

Quest Trust

Quest Trust Company is a self-directed IRA custodian headquartered in Houston, Texas. But while they are Texas-based, they administer accounts for client's across the U.S. When you open a self-directed IRA with Quest, you have the option to invest in real estate, promissory notes, private entities, cryptocurrency, and more.

You can open a Traditional, Roth, SEP, or SIMPLE IRA, in addition to a solo 401(k), HSA, or ESA account. Quest has three fee options: a $350 flat fee per asset per year, a fee based on total account value, and a Gold Family Concierge Service, for a $3000 flat annual fee.

Rocket Dollar

Rocket Dollar is different from Alto in that you can use a self-directed solo 401(k). And you’ll also create an LLC for investing in alternative assets. Rocket Dollar actually creates the LLC, but it's the entity within your retirement account that all alternative asset transactions flow through.

Once your account is set up, you can invest in a variety of alternative assets including real estate, gold, precious metals, cryptocurrencies, startups, and more. Read our full review of Rocket Dollar.

Strata Trust Company

Strata Trust Company is one of the leading alternative investment firms in the nation. They offer a large range of alternative investment choices, including:

• Real estate
• Precious metals
• Crowdfunding
• Private Equity

You can invest in each of these types of assets inside a Strata Trust Company self-directed IRA as well. Multiple IRA types are offered including Traditional, Roth, SEP, and SIMPLE self-directed IRAs.

The Entrust Group

The Entrust Group (TEG) has been in business for nearly 40 years. The company has over $4 billion in assets under custody, and serves over 45,000 investors. With TEG, you have direct access to an account manager, and you can access your accounts online 24/7.

Annual recordkeeping fees combine a flat fee with a percentage of the total asst value, for portfolios over $50,000. For example, if you have $150,000 in assets, your annual fee will be $349 ($199 annually + 0.15% for the asset value exceeding $50,000).

Specialty Picks

These are companies that offer a Self-Directed IRA but offer them for more specialized purposes. However, if you're just looking for a certain purpose, this could work for you!

Bitcoin IRA

Bitcoin IRA is a platform that allows you to invest in cryptocurrency in your IRA. This has been a growing trend over the last few years, and Bitcoin IRA combines the best of both a crypto wallet with a self-directed IRA account. You can invest in most of the major cryptocurrencies on the platform. Unfortunately, Bitcoin IRA charges very high fees when compared to similar platforms. This includes an account onboarding fee of up to 4.99% of assets, and an annual custodial fee of 1.00% of assets under management (AUM).

Read our full Bitcoin IRA review here.

BitIRA

BitIRA is a competitor to Bitcoin IRA and does basically the same thing - it allows you to invest in crypto in your IRA. The key difference is it allows you to hold slightly more coins and tokens, and they don't charge any setup or ongoing fees, versus Bitcoin IRA's high set up fee, and annual AUM fee. According to BitIRA, they charge a nominal fee on the spread when you place transactions. They have additional fees for special request, such as wire transfer fees or return check fees.

Read our full BitIRA review here.

Final Thoughts

Alternative investments are a great way to diversify a retirement portfolio. But they aren’t for everyone. There are more risks, less liquidity, and fees are often involved.

You’ll have to weigh returns on alternative investments against what you can get in the stock market, which has plenty of liquidity and low-cost products to invest in.

If you're looking to diversify and have a longer time horizon, alternative investments with self-directed IRA providers can be a good fit. But if you're an investing beginner, opening a regular retirement account with one of the top low-cost stock brokers may be a better place to start.

Methodology

The College Investor is dedicated to helping you make informed decisions around complex financial topics like finding the best self-directed IRA. We do this by providing unbiased reviews of the top brokerages and retirement accounts for our readers, and then we aggregate those choices into this list.

We have picked SD-IRA accounts based on our opinions of how easy they are to use, their costs and fees, any interest rates and bonuses provided, and a variety of other factors. We believe that our list accurately reflects the best self-directed IRAs in the marketplace for consumers.