When investing in self-directed IRAs, you need to be very careful because there is always the risk that you will make a bad investment. There just aren’t that many safeguards with this type of investment and you’re more on your own when you’re figuring out what to do with your money.

Many investors make the mistake of thinking that since their self-directed IRA is in the hands of a reputable company, they have nothing to worry about. This is simply not the case. Even though a trustworthy company is keeping your money for you, they don’t have to help you make good investments and they probably won’t offer you a lot of advice.

According to NASAA or the North American Association of Securities Managers, owners of self-directed IRAs have recently become the target of many scammers. They know that many investors are simply not as knowledgeable as they should be, and this makes them relatively easy targets.

Schematics

When looking for ways to invest with your self-directed IRA, be sure to do your own research. If an offer comes up that sounds really great, it might be too good to be true. Always rely on regulatory boards to try to verify whether an investment is valid or not. Pay close attention to any valuation information you receive, such as the original purchase price of an investment, and verify that this information is accurate.

One thing you really want to consider is a guaranteed investment. There are scammers who will tell you that an investment is guaranteed to make money no matter what. Every investor should be nervous when they learn of such a deal because they simply don’t exist in the investment world, unless they are backed by a government agency or bank, and even then there are risks.

While looking for an investment, also be on the lookout for any false information, even if it is not something very important. If an investor assures you that your “opportunity” is trustworthy and that you don’t have to worry about custodians having to verify investment agreements before allowing you to participate in them, stop listening immediately because you are setting you up for failure. Custodians are only responsible for holding your money and distributing it in any way you want, they do not control investments and they certainly do not verify anything.

By taking control of your own retirement funds and investing them yourself, you really need to make sure you don’t get involved in a scam. The last thing you want to do is lose your retirement fund to a scheme designed to steal your money. If you are unsure about choosing an investment yourself, it may be better to seek professional help or stick with more protected IRAs.