A long-term retirement strategy with interest
Private debt is a unique area for investors to capitalize on debt that’s incurred by individuals, companies, and corporations of varying sizes. What makes this option so distinctive is that you have the ability to purchase the debt and collect the interest — all on a tax-advantaged basis.
Types of private debt investments
Private debts can be an exciting investment prospect for savvy investors who have a high level of knowledge about purchasing corporate debt. Investments can be made indirectly by investing with other investors in a pool, also known as a fund, or individually negotiated.
With a self-directed IRA you can invest in private debt opportunities such as:
Mortgage Notes & Trust Deeds
Your IRA can lend funds through a promissory note or mortgage note secured by a deed of trust to an unrelated third party. Usually referred to as mortgage notes or trust deeds, the period payments of interest and principal made by the borrower flow into the IRA where they would remain tax-advantaged. As the note owner, your IRA can resell the financial instrument to another purchaser. Notes that are resold are usually sold at a discount to the instrument's original face value to compensate for the impact of inflation on future payments.
Timber deeds operate in an almost identical fashion to mortgage notes and trust deeds. Held in an IRA, investors that invest in timber deeds can avoid the dividends and capital gains from the land appreciation and/or sale of cutting rights and convert these to ordinary income later when withdrawn from the IRA.
Promissory notes offer self-directed IRA owners an additional option to diversify their investment portfolio. A promissory note is a debt-based financial instrument that involves one party making a written promise to repay a debt under specified terms. These terms usually involve a specific timeline for payments of interest and principal, the rate of interest being charged and the consequences in the event the borrower defaults.
Private Corporate Debentures
A corporate debenture is a debt instrument used by large corporations to borrow money, usually at a fixed rate of interest. Your IRA can invest in private corporate debentures (including convertible debentures) where the money is loaned out of your IRA to the corporation, and you receive the payments and interest on a tax-advantaged basis.
Onboarding a new private alternative investment to STRATA's platform starts with a pre-custody review to ensure we can custody the asset
How to get started
Open a self-directed IRA account and fill out the related forms.Open An Account
Fund your IRA with a transfer, rollover or annual contribution.Learn More
Direct your investment by downloading and completing our Private Debt Investment Checklist, which includes the items that must be submitted in advance as well as the investment direction form.Learn More