Unless you have been out hiking somewhere (and/or trying to enjoy the start of summer), you probably know that the United Kingdom has voted to leave the European Union (an event that has been termed “BREXIT” – as in “Britain Exit”). In less than 24 hours, this event has already caused considerable shock to global stock markets, and due to the unprecedented nature of the EU exit, there is considerable uncertainty that will likely last for weeks, months, or even years.
Based on my past experience in the area of self-directed IRA legal consulting, it is likely that interest in “nontraditional” (or “alternative” – i.e., non-publicly-traded) investments will increase as a result of BREXIT – or, more specifically, as a result of decreases in U.S. stock market. For example, the time periods following the “tech bubble” and the “real estate bubble” saw unprecedented growth in self-directed IRA formation and investment. This is somewhat logical, of course, in the sense that investors tend to be fearful of the stock market when prices are declining and they believe (rightly or wrongly) that they can invest their retirement accounts more wisely into real estate, private loans, or other non-publicly-traded assets.
For investors who have considered self-directed IRA investment in the past, who are perhaps “pushed over the edge” by BREXIT, please consider that very specific tax laws apply to investing retirement assets into nontraditional assets. It is always best to consider the rules before moving forward. For example, if you have liquidated some (or all) of your IRAs stock portfolio, it is best to learn the “ins and outs” of self-directed IRA investing (and how custodians operate) before doing anything tangible.