Roth Ira Investment Strategies

Written by Johnny Kitchens
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Financial advisors, IRA administrators, custodians, and facilitators will likely all have different ideas about the optimum investment strategy for your Roth IRA. This is because there is no one answer that is right for every investor in every situation. Still, the bulk of their advice to you will probably be similar. Large institutions will often dictate the strategies their customers may use and often have assembly-line account creation and structuring practices that rule out non-traditional investments.

Financial consultants and advisors at smaller brokerage firms and investment houses often have more leeway in the types of investments they can offer. Generally, the more personal attention a company can provide, the more options an investor will have. Well over 90 percent of all IRA assets are invested in stocks, bonds, and mutual funds. These are investments that require less time and effort to manage--both for administrators and for IRA owners.

There are other options, however, that have shown to provide returns far beyond those regularly generated by publicly traded securities. The biggest non-traditional IRA investment with the best track record is real estate. This includes residential properties, rental properties and commercial properties (like golf courses, resort properties, and commercial buildings). These investments are more complex, require more attention, and provide more chances for accidentally breaking the Roth IRA rules, but they can be very lucrative.

Working out Your Own Roth IRA Investment Strategy

It is all a matter of how much work you are willing to do, how much risk you are willing to take, and how much help you have. The least effort and the least risk usually will produce the lowest returns. That is the sacrifice for simplicity and security. If you have the time, the will, and the right IRA advisor, non-traditional investments can greatly increase your IRA's value. All decisions should be yours, though, because it is your money. Do not let yourself be talked into something with which you are uncomfortable.


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