Table of Contents

• Welcome back, Noyackers!

• What is Private Credit?

• 💸 Why Even Consider Private Credit?

• ⚡️Why Now?

• 📜 How to Start: Your Action Plan

• 🧐 The Missing Ingredient: Tax Optimization

• 🏁 Final Word

Welcome back, Noyackers!

There’s a reason pension funds, endowments, and family offices are loading up on private credit: in a volatile economy, it delivers what most investments can’t—predictable income, inflation protection, and portfolio resilience.

But here’s what the institutions won’t tell you: when paired with the right tax-advantaged accounts—like Self-Directed IRAs, HSAs, or Custodial Accounts—private credit becomes more than just yield. It becomes a tax-efficient engine for long-term wealth building.

In today’s edition, we’ll break down:

1. What private credit actually is (and what it isn’t)

2. How you as an individual can invest in it

3. And how to invest tax-advantaged—just like the big players—using tools you already have access to

Let’s get into it.

What is Private Credit?

At its core, private credit is non-bank lending—investors provide capital directly to companies (or via intermediaries), typically earning 8–12% annual returns through structured debt instruments. This includes:

• Loans to small and mid-sized businesses

• Real estate bridge financing

• Equipment or invoice financing

• Fractional debt investments via crowdfunding platforms

Traditionally, this asset class was limited to hedge funds and pensions. Today, individual investors can access private credit through:

• ✅ Private credit funds (interval or closed-end)

• ✅ Publicly traded BDCs (Business Development Companies)

• ✅ Reg CF crowdfunding platforms

• ✅ Self-Directed retirement accounts

💸 Why Even Consider Private Credit?

 Private credit offers investors higher yields, better downside protection, and true diversification beyond public bonds. Here’s why it stands out:

• Higher Yields: Earn more than traditional bonds, thanks to the illiquidity and complexity premiums.

• Floating Rate Advantage: Most loans are floating rate— periodically adjusting to reflect economic/financial conditions—helping hedge interest rate risk.

• Diversification: Access unique credit deals and asset-backed investments outside public markets.

• Downside Protection: Many loans are collateralized, which may reduce loss in a default.

⚡️Why Now?

Because 2025 isn’t 2015. We’re in a higher inflation, higher interest rate, higher uncertainty environment. Private credit:

✅ Delivers income when bond yields barely keep up with inflation

✅ Stabilizes portfolios due to low correlation with stocks

✅ Hedges inflation through floating-rate debt structures

✅ Provides access to real-economy borrowers seeking non-bank capital

In a world where the 60/40 portfolio is underperforming, private credit is where institutions are pivoting—and now, you can too.

📜 How to Start: Your Action Plan

1. Choose Your Account

Your account type will depend on your life and investment goals. Here are some tax-advantaged options:

✅ Self-Directed IRAs (Traditional or Roth)

• What it does: Lets you invest in private credit funds, Reg CF platforms, and even direct loans—tax-deferred (Traditional) or tax-free (Roth).

• Ideal for: Retirement savings, long-term investors comfortable with illiquidity.

• Caution: Avoid self-dealing (i.e., lending to your own business or family).

✅ Health Savings Accounts (HSAs)

• What it does: Triple-tax advantage—pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.

• Yes, private credit is allowed in an HSA if your custodian permits it—and the investment is arms-length.

• Best approach: Use platforms like Groundfloor or Republic for third-party debt offerings. Keep a $1,000–$3,000 cash buffer for expenses.

✅ Custodial Minor Accounts (UGMA/UTMA)

• What it does: Let you invest on behalf of a child, with earnings taxed at the child’s lower rate (up to the “kiddie tax” threshold).

• Ideal for: Building intergenerational wealth or funding future Roth IRA contributions.

• Good fit: Public BDCs and low-entry crowdfunding platforms.

💡 Key tip: Pick the account that best fits your goals: future you will be grateful.

2. Check if Private Credit Is Allowed

✅ Review Your Plan Type Most IRAs and 401(k)s at Fidelity, Vanguard, and Schwab don’t allow alternatives. You’ll need a Self-Directed IRA (SDIRA) or Solo 401(k) that permits alts like private debt and Reg CF offerings.

✅ Call Your Custodian Ask whether they permit investments in private placements, private debt, or Reg CF crowdfunding deals.

✅ Ask About “Checkbook Control” This optional feature allows you to write checks or wire funds directly from your SDIRA—giving you full flexibility to act on vetted private deals without custodial delays.

3. Open an Account with a Qualified Custodian

Once you’ve confirmed eligibility, open your account with a custodian that specializes in alternatives, like:

• Equity Trust

• Alto IRA

• Directed IRA

• UNest or Fidelity (for custodial accounts)

💡 Funding tips: There are many ways to fund your new account. Rollover an old 401(k) or IRA, transfer cash between IRAs, or contribute up to IRS limits. 

4. Invest in Private Credit (Diversify!)

 It is important to start small. Begin with 5–15% of your portfolio until you’re familiar with the risks, liquidity profile, and reporting mechanics of private credit. Here are some common investment options for individuals:

• Public BDCs: Liquid, accessible, income-generating like  Blackstone’s Private Credit Fund (BCRED)

• Reg CF Crowdfunding: Higher yield, low minimums ($10–$500)

• Private credit funds: For larger allocations (some require accreditation)

💡 IMPORTANT: Keep a cash buffer, especially for HSAs. Never lock up 100% of your HSA—keep $1,000–$3,000 liquid for unexpected medical expenses.

5. Pay Attention To The IRS

 Here are some ways to you can avoid common Private Credit pitfalls. 

• Don’t lend to yourself or your family

• Don’t use HSA or IRA funds for your own business

• Work only with third-party platforms or managers

💡 Note: Ensure your custodian supports annual fair market valuations and IRS compliance filings (e.g., Form 5498-SA for HSAs).

🧐 The Missing Ingredient: Tax Optimization

Even if you earn 10% from private credit, it means less if you lose 30–40% to taxes.

This is why savvy investors use tax-advantaged accounts to hold private credit investments. You can:

1. Defer or eliminate taxes on interest income

2. Compound gains faster

3. Avoid short-term capital gains treatment

And the best part? These strategies are completely legal under IRS rules—as long as you use the right accounts and avoid prohibited transactions. And remember: yield is great. Tax-free yield is better. 

🏁 Final Word

Private credit is powerful. Private credit + tax optimization? That’s unstoppable. Don’t just invest—invest intelligently. Use the tools the IRS gives you to grow, diversify, and protect your wealth.

 Most investors stop at “How do I get yield?” But the next level is:
👉 “How do I keep more of that yield?”
👉 “How do I grow it tax-free?”
👉 “How do I build wealth across generations?”

Private credit, when held in the right tax-advantaged structure, is a strategy not just for returns—but for legacy. 

Until next Sunday,
 CJ & The NOYACK Team
Access Granted™