Ira Investment Options

Written by Johnny Kitchens
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Most investors are aware of the tax advantages offered by IRAs and Roth IRAs. They are also aware that stocks, bonds, and mutual funds purchased by their IRAs are subject to the same volatility that is an unavoidable product of any free market. Wise investment decisions and solid risk assessment are the investor's weapons for fighting market volatility. Many investors do not know, however, that they have many more options for investing IRA assets.

In addition to publicly traded stocks and mutual funds, IRA assets can be used to invest in real estate, to invest in business ventures, and in many other non-traditional ways. The scope of IRA investing is defined more by what is disallowed rather than by what is allowed. As a general rule, assets in your IRA cannot be used in a way that will directly benefit you right now. (For example, you cannot invest IRA assets in a company in which you own a controlling interest.)

Investing IRA assets in things like real estate and franchises is not as widespread as it might otherwise be because many investors are unaware that they can do so. The banks and financial institutions that hold the majority of IRA assets for their clients prefer simpler investments like mutual funds and bonds. Setting up a franchise or buying real estate with IRA assets is much more complex and requires more planning to ensure compliance with IRS rules.

How to Take Advantage of Non-Traditional IRA Investment Options

Your IRA advisor should be able to tell you step-by-step how to set up any allowed IRA investment within IRS guidelines. If they cannot, it may be for one of several reasons. The investment may be so risky that they want no part of it. The investment may be of questionable legality. Or, your IRA advisor does not know how. Your choice of advisors will affect your ability to make the kinds of investments you want to make. They should always advise you of the risks, however, rather than rubber-stamping every idea.


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