Rocket Dollar Review – A Unique Investing Platform

Rocket Dollar was founded in 2018 to solve one of the problems that retirement investors have long faced: investing in assets other than stocks and bonds in your retirement portfolio. With Rocket Dollar, you can open an LLC under your retirement account and invest in just about anything you want. That includes alternative investments like real estate, cryptocurrency, startup companies, and more.

Rocket Dollar retirement accounts are completely self-directed, which is good and bad. It gives you total flexibility, but it also means you’re responsible for navigating the world of non-traditional investments on your own. So, this platform is best for investors comfortable doing their own research and navigating IRS restrictions.

In our Rocket Dollar review, we’ll cover everything you need to know to decide if a Rocket Dollar account is right for you.

How Does Rocket Dollar Work?

Rocket Dollar offers five different types of retirement investment accounts: Traditional IRAs, Roth IRAs, Solo 401(k)s, SEP IRAs, and Inherited IRAs. What makes Rocket Dollar unique from other brokerages that offer these self-directed retirement accounts, though, is the next step. When you open a retirement account with Rocket Dollar, the company creates a new limited liability company (LLC) inside of it on your behalf.

When you deposit money into your retirement account, it counts the same as any other retirement savings contribution in the eyes of the IRS. But, that money is then transferred from your retirement account to your LLC. The advantage of this configuration is that your LLC can hold not just stocks and bonds, but also alternative assets that most retirement investment platforms don’t offer. That includes asset classes like real estate, precious metals, cryptocurrency, equity in startup companies, and just about anything else you could want to invest in.

Investments through Rocket Dollar are entirely self-directed, meaning that you are solely responsible for researching assets and deciding what to invest in. When you want to invest your money in something, you simply write a check from your LLC bank account. So, the platform puts virtually no limits on what you can do with your money.

Importantly, though, there are some limitations imposed by the IRS on what you can legally invest in through traditional and Roth IRAs or Solo 401(k)s. The Rocket Dollar website does a good job of highlighting investments that are disallowed for legal and tax reasons in an online knowledge base. If you’re investing in very non-traditional assets – for example, timberland, art, life insurance, or commodities – you can contact the customer service team at Rocket Dollar to get more specific guidance on what is allowed. (Rocket Dollar points out that its support should not be considered investment advice.)

Account Requirements

Rocket Dollar doesn’t require a minimum account balance. Only US citizens are eligible to open an account. The platform has a questionnaire to help you decide which type of brokerage account is most suitable for you.

Rocket Dollar Pricing and Fees

Rocket Dollar has two different plan tiers: Core and Gold.

The Core plan charges a one-time setup fee of $360 and a flat monthly fee of $15. This plan sets up your brokerage account and LLC so you can make investments, but doesn’t offer much else. You’re also limited to customer support by email only.

The Gold plan charges a one-time setup fee of $600 and a flat monthly fee of $30. You get access to customer service over the phone, as well as a debit card and checkbook control for you LLC’s bank account. In addition, the Gold plan comes with automatic filing of your investment-related tax forms and four free wire transfers each year.

It’s worth noting that these account fees are not cheap for self-directed IRAs. If you have a $10,000 investment, $15 per month is equivalent to a 1.8% annual fee. That’s less than you’d pay for a money manager, but far more expensive than most brokerage-based IRA accounts.

Platform and Tools

For the seeming complexity of your Rocket Dollar account, the account management platform is impressively simple. To be sure, it’s not an investment research platform. When Rocket Dollar says that you have a self-directed retirement account, what it really means is that you’re largely left to find investments and purchase assets on your own.

The main thing that the Rocket Dollar platform offers is a way to track all of the investments that your LLC holds. You can manually add information about your investment into your account. For most common alternative asset classes, such as cryptocurrency, metals like gold, silver, and copper, and real estate, Rocket Dollar will automatically track the value of your investments. Of course, it’s also possible to manually input investment returns into the Rocket Dollar investment tracker when you offload an asset.

Rocket Dollar Platform Differentiators

Rocket Dollar is extremely unique. It’s one of the only consumer-oriented platforms that allows you to set up an LLC under a self-directed IRA or Solo 401(k). Almost no other investment platforms will allow this for retail investors. While it’s possible to open an LLC under a tax-advantaged retirement account on your own, the hurdles to doing so make it prohibitive for the vast majority of retirement savers. The appeal of Rocket Dollar is that it cuts through the red tape while offering the minimal handrails you need to legally invest in a huge range of alternative assets.

Is Rocket Dollar Safe?

Rocket Dollar is relatively new, which begs the question of whether it can be trusted with your money. The platform has gone to great lengths to ensure investors that it’s trustworthy. Rocket Dollar is SOC compliant, a security certification established by the American Institute of CPAs, and undergoes regular audits to ensures the platform remains secure. It’s also important to note that your money is held at a partner bank, not by Rocket Dollar itself. However, funds inside your investment account are not covered by SIPC insurance since they’re held by your LLC.

What Type of Investor is Rocket Dollar Best For?

Our Rocket Dollar review found that this platform is best for retirement investors who want to add investments other than stocks and bonds to their retirement portfolios. While you could invest in stocks, bonds, and mutual funds with Rocket Dollar, it’s very expensive relative to a brokerage-based IRA account or Solo 401(k) account if you use it for this purpose. So, the platform is ideal for investing in real estate, commodities, cryptocurrency, startups, precious metals, and other alternative investments that aren’t allowed in standard retirement accounts.

Importantly, investors using Rocket Dollar need to be capable of performing their own research on investments. Rocket Dollar does not act as an investment advisor and all investments are completely self-directed. You also need to understand how the IRS prohibits IRA funds from being used, even when they’re under an LLC. This platform embodies the sentiment that with great investing power comes equally great financial responsibility.

Pros

• Unique, simple way to invest retirement funds in non-traditional assets
• Much less expensive than opening an IRA LLC on your own
• Supports Roth IRAs and Solo 401(k)s
• Interface helps you track and manage investments
• Customer support team can help navigate IRS restrictions

Cons

• Very few guide rails, making it suitable only for advanced investors
• Gold plan can be very pricey relative to your total investment