This week’s capital raise segment is about how you can use your retirement funds to make investments. Head over to our YouTube channel or check out these articles from Zack’s, New Direction Trust, and American IRA to learn more.
We wanted to point out something that you may or may not know. If you’re actively seeking to raise capital for your business, it is possible for your investors to invest in your company through their retirement funds. Sometimes we come across folks who are very interested in our company or our idea, but they don’t have the the capital handy. However, they might have a retirement account. Maybe it’s a company 401k, perhaps it’s in their IRA’s. Whatever the situation, it may be possible for them to use some of those funds, put them into a self-directed IRA, so that they can then in turn purchase private securities, which would be the stock in your business.
To do that there’s a few simple steps. First, they need to set up the self-directed IRA. A lot of times, whoever’s the custodian of your IRA funds will say, “No, you can’t do that,” but what they mean is you can’t do it with them. This practice is completely above board and legal, so we’ve referenced several articles that will tell you how to do it. There are custodians such as New Direction who’ll be happy to be the custodian of your fund, and they will invest it however you tell them to. You set up the self-directed IRA with a proper custodian, and then you direct them how to invest the funds.
This also works for commercial real estate or any kind of investment real estate. You cannot invest it into your own company! That’s deemed “self dealing,” so that would be a no-no.
Check out the above articles! If you’re looking to raise money for your company and there’s any way that we can help you here at Harvard Grace, let us know.