Research by the custody services company Millennium Trust has found that most high-net-worth (HNW) investors are familiar with real estate as an investment (with 1 in 3 already invested). But what they might not know is that they can hold real estate in a self-directed IRA—or what the benefits could be of doing so. In a recent webinar, Ted Parker of Millennium Trust and Andrea Gonzalez of CrowdStreet discussed how investors can use funds from SD-IRA accounts to invest in alternatives, including commercial real estate through the CrowdStreet Marketplace.
Now, this is pretty interesting. The typical individual investor, you and me and your friends and your neighbors typically has a portfolio. It looks like this about 16% fixed income, 18% in cash and 66% in equities.
Next slide we show looks at what the institutional investor looks like. So on, on this side, you'll see that the average institutional investor and these are institutions like Calpers, for example, the largest pension in California, Harvard Pension plan.
Stanford, all those big universities and endowments, they typically have a 53% allocation to alternative investments. And why would they have 53%? Think about that.
There's there's some reason why they're doing that. They're managing money for long term expense for long term expectations and they've determined that these alternative investments are less susceptible to the ups and downs of the markets. And can you get better returns with less risk over time in this survey that millennium?
Did we found that one in three investors already owns some form of real estate? Nine out of 10 survey respondents said that they have some interest in investing in real estate.
Mhm Most high net worth investors own real estate, but they don't know they can own it in their IRA account. If they knew they could own it in their IRA account, in the retirement account, they would invest it.
So part of our job at Millennium is to educate investors on the importance of the ability to be able to invest in these alternative investments like real estate in the retirement account.
So the benefits of a self-directed IRA is that you've got control over your account. You can invest in things like the Crowd Street individual marketplace investments or the Crowd Street fund blended portfolio or the separately managed account. You can invest in hedge funds, private stock, private bonds, peer to peer notes, precious metals, all these alternative investments that you typically cannot hold in your account at another custodian.
