History may deem the 2020s as one of the more exciting decades for new investment opportunities. We already see the promise of 5G networks, self-driving cars, and broadening private sector participation in space exploration. The latter is particularly intriguing because the door has been opened for private individuals to directly engage in extraterrestrial exploration…and also invest in companies dedicated to such efforts.
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Publicly traded companies like Lockheed Martin can provide some investment exposure to space technology, but there is a growing class of private companies specifically dedicated to reaching the stars. Fortunately, your self-directed IRA, Solo 401(k), or Health Savings Account can invest in these companies even if they don’t trade on the New York Stock Exchange.
Investing in Space Through Private Equity
Prominent private space companies like SpaceX and Blue Origin have yet to debut in public markets, but you can still hold equity in these companies with your savings plan. Once your account is open and funded, you can vet the private equity opportunity of your choosing and fund it with your tax-advantaged money. This could happen through a subscription agreement, a direct purchase of private stock, or through online marketplaces that specialize in private equity offerings.
Upon execution, your self-directed account becomes the “investor” that “owns” private equity. This means any future earnings carry the tax-deferred or tax-free benefits of the account. If a privately traded space company in which your account is invested decides to go public and sends the stock price through the roof (or to the moon, more appropriately), you wouldn’t owe taxes on those gains unless and until you withdraw them from your account. In the case of a Roth IRA, you may not owe taxes on those earnings at all.
Become an Accredited Investor
Some high-profile private ventures only accept capital from accredited investors. However, a recent decision by the Securities and Exchange Commission made it easier than ever to become accredited. Whereas before you would need more than $200,000 per year in income over the prior two years, a net worth of more than $1 million, or be a high-ranking officer for a firm that sells unregistered securities, now all you need is a Series 65 license.
A Series 7 or Series 82 would also suffice for accreditation, but the processes for obtaining these licensures are a little more complex. For a Series 65, you need only pass the Series 65 exam.
Self-directed accounts carry the same accreditation as their holders. So, once you pass your Series 65 and become an accredited investor, your IRA, Solo 401(k), or Health Savings Account can automatically enjoy extensive new capabilities to invest in private equity opportunities.
Let NDTCO Help You Get Started
New Direction Trust Company can help make your investment vision a reality. If you didn’t know you could invest in the space industry but now, you’re ready to get started, click here to access our online account application. Don’t hesitate to give us a call at 877-742-1270 or send us a message through the Client Portal if you have any questions.