Three million new businesses are created in the United States each year and with each of those another investment opportunity. By taking advantage of some of these startups, you can potentially boost your retirement fund, but only if you choose your investments carefully and diligently follow all the rules involved with using a self directed IRA with startups.

There are two different ways to invest money in a new startup using an SDIRA, the first is to invest money in startups that look promising to you, and the second, and slightly more complicated, is to invest in your own startup that you are profiting from.

The first method is relatively easy after you have chosen a good custodian that will allow you to invest in new ventures. After you have a supporting custodian, you must fund the IRA through a rollover from one of your other retirement accounts or through an annual contribution to the account. From there the process becomes a bit more complicated because you have to choose a startup that is going to be successful, and that is not easy to do.

The best way to improve your chances of success when choosing a startup is to stick with the things you know. For example, if you worked all your life as an engineer, it might not be a bad idea to look for startups in the engineering sector because you’ll know what products and services are the most valuable there. If you don’t feel you are qualified to make your own decision, you can also rely on investment experts to help you find a good start-up, but even a very talented adviser cannot guarantee that a company will succeed.

Now that you’ve found a startup you really believe in, it’s time to invest in it. The best way to do this is to buy company stock using funds in your IRA account. Later, when the company grows and is worth more money, its shares will grow and provide the potential for very respectable profits.

Trying to invest money in your own startup is a bit more complex and can often lead to the IRS penalizing you if you do something wrong. First you have to create a C corporation. From there, you need to transfer the money from your IRA to your company’s IRA. Now you can invest that IRA money in your business in exchange for shares in the company. Although this method has worked for other investors in the past, it does not mean that it will work for you. It is very important to have lawyers and accountants to help you with this process to avoid incurring penalties for making a false step.

With the right help, you can take idle money from your retirement account and invest it in a promising new business venture. Just be sure to do your research and get help from professionals before risking all or part of your retirement.