With market volatility sending shockwaves through traditional investment portfolios, many investors are seeking alternatives through vehicles like self-directed IRAs that can thrive regardless of Wall Street’s ups and downs. In this episode, I share how I strategically repositioned a portion of my retirement funds into real estate and private lending to create a more resilient portfolio designed to generate consistent returns even during turbulent economic times.

Episode Overview

In this detailed workshop, I walk through my journey of moving $276,000 from traditional stock investments into alternative assets through a self-directed retirement account. Drawing on my background in financial planning and nearly 15 years of active real estate investing experience, I explain the concept of non-correlated assets and why they’re crucial for protecting wealth during market downturns. The discussion covers the specific investments I made, including private lending opportunities, multifamily development projects, and build-to-rent communities, along with the expected returns and my rationale for each decision.

Timestamps

(00:00) Introduction
(04:18) Stock Market Performance vs Real Estate Returns
(09:35) Correlation Problem in Traditional Retirement Portfolios
(14:27) Self Directed IRAs for Alternative Investments
(19:13) Private Lending as Real Estate Investment Strategy
(25:46) Real Estate Passive Investing Opportunities
(31:20) Portfolio Rollover Strategy and Expected Returns
(45:53) Custodian Options and Implementation Resources

Understanding Non-Correlated Assets and Their Importance

One of the fundamental challenges with traditional retirement portfolios is their vulnerability to market-wide downturns. When stocks tumble, most mutual funds and ETFs fall in tandem, demonstrating high correlation that can devastate retirement savings.

“When markets crash, traditionally they all crash or they all go up together… I have diversification across 500 or thousands of companies, which is great. I don’t want all my money in one or two or three companies… however, it’s all in the same asset class. And for the most part, all of those are correlated.”

• In the 2008 crash, the S&P 500 dropped 37%, international stocks fell 43%, and corporate bonds tumbled 5-15%—all moving downward together
• True diversification isn’t just about owning different stocks or adding bonds—it requires assets that make money through fundamentally different mechanisms

A non-correlated asset allocation might include public equities, private equity, infrastructure investments, real estate, and private credit, creating a far more resilient portfolio than the traditional stock-and-bond mix. This approach provides protection not just during normal market conditions but especially during crises—precisely when diversification matters most.

Self-Directed IRAs and Retirement Accounts: The Gateway to Alternative Investments

Traditional IRAs and 401(k)s typically limit investors to stocks, bonds, mutual funds, and ETFs. To access alternative investments like real estate and private lending, you need a self-directed retirement account with a specialized custodian.

“The biggest difference is that self-directed IRAs and 401(k)s just give you a lot more freedom in what you can invest in. You have the same tax-deferred or tax-free growth. If it’s a Roth, you have the same contribution limits, same distribution rules, and same early withdrawal penalties.”

• Self-directed accounts maintain all the tax advantages and rules of traditional retirement accounts but allow investment in alternative assets
• Two main options for self-directed accounts include working with a custodian who manages transactions or establishing “checkbook control” through specialized structures

While directly owning rental properties in a self-directed account is technically possible, it’s often impractical due to non-recourse loan requirements (typically requiring 40-50% down payments with higher interest rates) and IRS prohibited transaction rules that prevent self-management.

My Real-World Investment Strategy and Allocations

After analyzing historical returns and considering the current economic environment, I strategically deployed my $276,000 across four specific investments, targeting much higher returns than the stock market’s historical average.

Here’s how I allocated the funds:

1. Private Lending Debt Fund ($150,000 – 54% of rollover)
   • Investment in a Midwest-based hard money lender providing loans to real estate investors
   • Targeting 24-26% annual returns through interest payments and origination fees
   • Delivers consistent monthly income without correlation to stock market performance
2. Colorado Multifamily Development Fund ($50,000 – 18% of rollover)
   • Investment across three multifamily development projects in Washington Park (Denver) and Colorado Springs
   • Functions like a mini mutual fund for real estate with projected returns of 22-25%
   • Targeted completion in approximately four years with strategic timing for market cycles
3. Build-to-Rent Single-Family Community ($50,000 – 18% of rollover)
   • Investment in a 200+ home purpose-built rental community in Ohio
   • Offers geographic diversification outside Colorado with projected 21% IRR
   • Combines the benefits of single-family homes with multifamily-style professional management
4. Value-Add Multifamily in Oklahoma City ($25,000 – 9% of rollover)
   • Classic value-add strategy buying distressed multifamily at a discount
   • 4-5 year hold period with estimated 17-20% returns
   • Further geographic diversification in a landlord-friendly market

This diversified approach spreads risk across multiple markets, operators, and investment strategies while maintaining the tax advantages of retirement accounts.

The Practical Steps to Implementing a Similar Strategy with Self-Directed IRA Custodians

For investors interested in pursuing a similar path, I emphasize several key considerations about self-directed retirement accounts and alternative investments.

“I would recommend you talk to all three [custodians]. And there’s also a lot of other companies that do amazing work as well. So there’s a lot more custodians than just these three.”

• Selecting the right custodian is critical—options include Sense Financial, Equity Trust, and New Direction IRA
• Understanding the differences between Solo 401(k)s (for self-employed individuals) and self-directed IRAs (available to anyone)
• Being aware of specialized rules like UBIT (Unrelated Business Income Tax) that can affect retirement account investments

The implementation process typically involves:

1. Opening an account with a specialized custodian
2. Rolling over funds from existing retirement accounts
3. Working with the custodian to complete investments in your chosen alternative assets
4. Managing ongoing compliance and reporting requirements

Conclusion

The strategic repositioning of retirement assets into non-correlated investments represents a powerful approach to building wealth that can withstand market volatility. By moving $276,000 from traditional stocks into carefully selected real estate and private lending opportunities, I’ve created a portfolio targeting returns potentially three times higher than the stock market average while significantly reducing exposure to market-wide downturns.

As markets continue to experience volatility, consider whether your retirement portfolio has sufficient diversification across truly non-correlated assets. While this approach isn’t about abandoning stocks entirely—I still maintain significant stock investments—it’s about creating balance through strategic allocation to alternative investments that can thrive in any economic environment.

To learn more about these strategies and see detailed breakdowns of the investments discussed, listen to the full episode and explore the resources below. For those interested in receiving the 2025 Guide to Colorado Real Estate Investing Strategies, reach out directly for your complimentary copy.

Links from Podcast

• Self-Directed IRA Custodians:
  • Sense Financial – Offers checkbook control options
  • Equity Trust – Full-service custodian for self-directed accounts
  • New Direction IRA – Colorado-based custodian
• Banks Specializing in Self-Directed Accounts:
  • Solera National Bank (Lakewood, Colorado)
  • Titan Bank
• Other Resources:
  • 2025 Guide to Colorado Real Estate Investing Strategies (physical book)
  • Spreadsheet analysis of investment returns (available upon request)

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