Thiel’s secret to success
One overlooked feature of the Roth IRA is the ability to choose your favorite assets (within the constraints of the IRS rules) to put your contributions to work.
Thiel was among a select group with exclusive access to shares of PayPal before the company went public. This deal gave him a leg up. Unfortunately, most traditional brokerages will limit your purchasing power to assets that are held at their company, such as publicly traded stocks, bonds, and mutual funds. If this is what you are comfortable with, then keep collecting these assets in your portfolio. In 2019, the S&P 500 delivered an impressive 31% return. Although those strong returns don’t come around every year, the stock market is a great way to build wealth over time.
However, if alternative assets are more your style, you can work with a trust company to diversify your portfolio mix. Thiel worked with a trust company to invest in private company shares. He invested in assets within his circle of competence and allowed the power of time and growth to deliver explosive returns over the long term. Again, you just have to know the rules and ensure that the assets you select meet the parameters of a Roth IRA.
Unlock your Roth IRA riches
Let’s be clear: There’s a high probability that you won’t wake up with a billion-dollar Roth IRA by investing in traditional assets alone. But that shouldn’t stop you from using the Roth IRA to build wealth. It’s possible to reach the million-dollar mark if you start early, contribute consistently, and invest in high-quality assets.