When investing through a self-directed IRA, it is the responsibility of each individual investor to determine how suitable and advisable of a proposed investment may be. While some investments may be relatively easy to understand, others may demand scrutiny far beyond the average investor’s capability.
All investors are encouraged not only to surround themselves with good investment and financial advisers, but also to discuss with their tax experts the impact of using IRA funds for particular classes of investments.
Unfortunately, unscrupulous promoters of “investment opportunities” are plentiful, and many of them may advocate making such investments using a self-directed IRA. A poor investment decision hurts regardless of what type of account it’s in or where it is held.