Over the past decade, options for “alternative” investing have mushroomed.
In the past, investing in alternatives typically meant investing in a precious metals fund or physical metals if you were being particularly crazy. But today, alternative asset classes can mean anything from crowdfunded real estate, to digital currencies (like bitcoin), to startups and peer-to-peer loans.
While it’s easier than ever to find alternative asset classes online, it can be tough to take advantage of the opportunities for investment. In most cases, a regular investor has most (or all) of her investments locked away in retirement accounts. Getting enough money to invest for goals other than retirement is a real challenge.
Want to invest in alternative investments but use your retirement money? Alto IRA may have a solution for you - especially if you're looking for self-directed IRA.
- Self-Directed IRA Provider
- Allows investors to invest in alternative assets in an IRA
- Tough to follow pricing structure could be a challenge
What Is Alto IRA?
Alto IRA is a brokerage company that facilitates investments in alternative asset classes through retirement accounts (IRAs). It calls its retirement account The Alternative IRA(TM), but it’s simply an IRA with flexible investment options (also known as a self-directed IRA).
Unlike many companies, Alto IRA allows its investors to invest in almost anything (that’s legal). It partners with angel investing funds, real estate lending companies, crypto exchanges, and a variety of other online alternative investment providers to facilitate investment opportunities. Some of the investment partnerships are only open to accredited investors which are people earning at least $250,000 per year or having a net worth in excess of $1 million.
Additionally, investors can choose to invest directly in private deals. For example, you could use your IRA to buy a duplex in another city, or to fund a loan to a friend starting a business.
What Types of Accounts Does Alto IRA Support?
Alto IRA supports traditional IRAs, Roth IRAs, and SEP-IRAs. If you have a rollover account, you can roll it into the traditional IRA account.
Alto IRA doesn’t support inherited IRAs or individual 401(k)s.
Can I Really Invest in Anything?
Alto IRA facilitates “Direct Investments” and “Partner Investments.” [Editor’s Note: See pricing page.] Direct investments are any investments you make through Alto IRA without engaging one of Alto IRA’s partners. An example would be extending a small business loan or buying a piece of residential real estate.
While Alto IRA allows most investments through its platform, it does have some restrictions. The investment must be legal. For example, you cannot buy yourself a house with your retirement funds.
However, you can buy, flip, and sell a property using your retirement funds without losing the tax-advantaged status. But you must be careful to follow all the rules associated with buying and selling property or you could accidentally create a taxable event.
How Much Does Alto IRA Cost?
Alto IRA has a different cost structure than most IRAs. Instead of charging a fee based on a percentage of assets, you pay three different fees as follows.
First comes the $49 account activation fee. This fee is “sort of” refunded. When you activate your account, you’ll have a $49 credit applied to your account. You can use this to reduce the next fee which is a transaction fee.
Second, each time you make an investment you’ll pay a fee. The rates are below:
Up to $2,500
Up to $10,000
Up to $20,000
Up to $50,000
Third comes the annual reporting fee. This fee is $49 (paid quarterly) plus up to $499 a year based on the number of partners or investments you have.
Note: You pay $99 if you invest in a single platform partner. You pay $199 if you invest in two or more partner platforms. You also pay $99 per year for each self-directed investment.
Should I Use Alto IRA?
Whenever I talk about alternative investments, I think it’s important to remind people that with a high savings rate, you can probably become rich using investments like index funds in the stock market. You really don’t have to be fancy to become financially independent.
That said, I can certainly make a case for using a self-directed IRA. If you are a skilled real estate investor (or a skilled angel investor or bitcoin investor), Alto IRA could help you put more funds towards your investment empire.
Of course, you shouldn’t delude yourself into thinking you’re a better investor than you are. But if you think that alternatives will play an important role in your investment portfolio, I think that Alto IRA has a good offering at a fair price.
You can compare their options with competitors like Rocket Dollar.
Not sure whether alternative assets make sense in your retirement investment portfolio? I would urge you to stick with conventional investments until you determine whether these asset classes make sense for you.
Simply put, alternative assets don’t belong in every retirement portfolio. Be careful, but don’t let caution stop you from making the right investment choices for yourself.
Alto IRA Review
- Pricing and Fees
- Products and Services
- Customer Service
Alto IRA is a self-directed IRA provider that allows you to invest in alternative assets inside your IRA (such as real estate, cryptocurrency, private stock, and more).
- Self-Directed IRA Provider
- Easy to setup accounts
- Hard to understand the fee structure
- May not be the right choice for most investors
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.