• Home
  • Insights Blog
  • Diversifying Your Retirement Portfolio: What Investors Need to Know About Investing in Crowdfunding

Diversifying Your Retirement Portfolio: What Investors Need to Know About Investing in Crowdfunding

What investors need to know about crowdfunding

The current environment has highlighted the importance of having a portfolio that is diversified enough to withstand market turbulence. As investors seek shelter from the storm that COVID-19 has brewed up in the investing world, they are turning toward unique ventures to safely build long-term wealth in an efficient way. One opportunity that’s sometimes overlooked is crowdfunding.

Crowdfunding emerged in 2009 as a funding source for business ventures, and it quickly gained steam among consumers. But what is often overlooked is the investing opportunities that crowdfunding presents. STRATA identified this opportunity early on and became the first-ever custodian to provide a self-directed IRA (SDIRA) service in the crowdfunding space. Crowdfunding is a popular way for entrepreneurs to help raise funds for startups and new business opportunities; it provides a great investment opportunity for SDIRA investors seeking a rewarding way to invest their money.

The benefits of crowdfunding are vast and investing via SDIRA requires a straight-forward set-up process. Simply open your IRA online or with a paper application, rollover or transfer your funds and direct your investments. Not only is getting started in crowdfunding with a custodian a seamless process, but it holds the added benefit that crowdfunding allows investors to put money into something they truly believe in, making it an even more attractive option.

Why invest in a self-directed crowdfunding IRA?

Other than being a unique opportunity, crowdfunding offers many benefits to investors, including:

1.  Direct and simple access. Finding investment opportunities in privately-held ventures at one point required a lot of networking organically through business contacts and being in the right place at the right time. Now, with a surge in investment platforms, crowdfunding options are right at the fingertips of any type of investor who is interested in dipping a toe in the crowdfunding realm.

2.  Lower cost than ever before. Traditional ways of investing in private business ventures proved to be costly no matter how investors went about it. Doing so through crowdfunding lowers the cost for the individual by making the entire process more accessible on a large scale.

3.  Diversification. During times of market volatility and uncertainty, diversification is extremely important. Not only does crowdfunding add something unique to your portfolio, but there are countless options under the crowdfunding umbrella to choose from. Some of these asset types include real estate, consumer and corporate debt, private stock, solar panels, loaning money directly to businesses, mortgage loans and so much more.

4.  Support. STRATA has your back. STRATA Trust acts as a custodian on behalf of the investor. This means that we are with you every step of the way, from setting up an account to helping you choose the investment option that is perfect for you. Support from a custodian makes the crowdfunding investment process simple, gratifying and efficient.

5.  A wide-reaching impact. Choosing to crowdfund through a self-directed IRA is choosing to put your money where your heart is. Not only will it offer benefits to the investor, but it helps grow the economy by enabling entrepreneurs to build up their small-business ventures and start-up companies in a more efficient way.

STRATA makes it its mission to provide a clear path for investors to control their financial future by investing in what they believe in. Choosing STRATA as a custodian offers advantages including stability, speed, communication and the proper technology that will guide you through getting started in the crowdfunding space.


Disclaimer: The information provided herein does not, and is not intended to, constitute personalized financial or legal advice. The contents of the article are for general informational purposes only and should not be relied or acted upon without specific professional legal or financial advice, based upon an individual’s situation.

Tags: all things retirement, alternative investments, crowdfunding, IRA, IRA investments, SDIRA, self-directed ira, tax strategy