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Investing in Mineral Royalties with a Self-Directed IRA

Investing in Mineral Royalties with a Self-Directed IRA

You are probably aware that there are a number of oil and gas investment opportunities available, but did you know that you have options beyond the traditional IRA models? Yes, there is a way to directly invest in the development of tangible and domestic energy interests, by means of oil and gas royalties.

self-directed individual retirement account (IRA) is a type of IRA that allows account holders to invest in a broader range of assets than traditional IRAs, including real estate, private equity, and other alternative investments. Self-directed IRAs are typically held by a custodian or trustee that specializes in this type of account and can provide administrative and logistical support.

Unlike traditional IRAs, which are limited to investments in stocks, bonds, mutual funds, and other securities, self-directed IRAs give investors greater flexibility to choose the investments that best fit their individual financial goals and risk tolerance.

A self-directed IRA is used mainly for investing in other investment opportunities typically not allowed by IRA custodians. They include but are not limited to, royalty properties and oil and gas mineral rights.

Self-directed IRAs are subject to the same contribution limits and distribution rules as traditional IRAs, and investors must comply with IRS regulations and guidelines when making investment decisions. Hence, it is advisable that investors consult with a qualified financial advisor and tax professional before opening a self-directed IRA or making any investment decisions.

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A viable investment strategy

Investing in mineral royalties with a self-directed IRA can be a feasible investment strategy for those looking to diversify their retirement portfolio. Mineral royalties are payments made to the owner of the mineral rights for the use of those rights by a third party, such as a mining company. Investing in mineral royalties can provide investors with a passive income stream that is not tied to the performance of the stock market.

Steps to invest in mineral royalties with a self-directed IRA

Set up a self-directed IRA

A self-directed IRA is a kind of individual retirement account that allows the account holder to capitalize on a wider range of assets outside conventional stocks, bonds, and mutual funds. To set up a self-directed IRA, you will need to find a custodian that specializes in this type of account.

Fund your self-directed IRA

Once you have set up your self-directed IRA, you will need to fund it. You can fund your self-directed IRA through contributions or by rolling over funds from an existing IRA or 401(k).

Research mineral royalty opportunities

There are several ways to invest in mineral royalties, including direct ownership, partnerships, and publicly traded royalty trusts. It’s important to research the different options available and evaluate the potential risks and rewards.

Purchase mineral royalties through your self-directed IRA

Once you have identified a mineral royalty opportunity that fits your investment goals, you can purchase it through your self-directed IRA. Your custodian will handle the transaction on your behalf and ensure that it complies with IRS regulations.

Manage your investment

As with any investment, it’s important to monitor your mineral royalty investment and make adjustments as needed. You will receive royalty payments on a regular basis and may need to evaluate the performance of your investment periodically to determine whether to continue holding it or sell it.

Take the Next Step

By means of a self-directed IRA, you can invest in practically anything, including royalty and mineral interests.

Similar to all oil and gas investment opportunities, investing in mineral royalties with a self-directed IRA comes with risks, including fluctuations in commodity prices and changes in the regulatory environment. It’s important to work with a qualified financial advisor and do your own research before making any investment decisions.

DW Energy Group’s team has the experience to walk you through every step of the process to invest in oil and gas with IRA funds.  Diversify your retirement portfolio today; click here to request more information.

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“Self-Directed IRA (SDIRA): Rules, Investments, and FAQs,” Investopedia,
“Self-Directed IRAs,”,“A Guide to Self-Directed IRAs,” U.S. News & World Report,