Opening an IRA to save for your retirement is an exciting prospect, but it can also be a little intimidating with so many investment strategies open to you. In most cases, people stick with mutual funds and individual stocks, but they may be unaware that they can diversify their holdings among a wider range of investments. By taking full advantage of the opportunities available to you, you can increase your chances of achieving greater returns and a more positive outlook for your future.
Adding Precious Metals to Your Portfolio
You might already have invested in precious metals through your choices in stocks and funds, but maybe you would feel better about actually purchasing the metal itself. Whether your preference is for coins, gold bars, or silver, there is a process that makes it possible to add these products to your IRA portfolio. It will require you to obtain an IRA specialty custodian, before you can proceed.
Next, you’ll be required to complete an application and fund the account with the money you’ll use to buy the metals. This is important, because you cannot use precious metals already in your possession, according to IRS stipulations. The third step involves choosing the metals for your investment. For instance, you might choose gold bars, which will require you to negotiate with as gold broker. Once you settle on the price and quantity, you’ll contact your specialty custodian, who will execute the deal and issue payment.
Real Estate Presents a Number of Investment Opportunities
Trust deeds are one way to go in which your funds are loaned to a borrower with their real estate put up as collateral. In this scenario, you’ll essentially become the banker for this one property with your IRA account loaning the money. This is a secured loan, because your money is backed by the asset of the real estate property, though you won’t see a profit, if the value of that property happens to rise. Still, the rate of return is significantly higher, when compared to other investments.
Another option is to buy real estate directly with your IRA funds, but check with your administrator before you act. Some IRAs won’t allow this type of investment. Additionally, all expenses must be paid with your IRA funds, because the IRS prohibits mixing non-IRA funds with your investment. You’re also restricted from buying property for your own personal use, or you may face penalties.
Buy Interest in a Business
Here is another option that you might want to consider, especially if you know of a business that you believe will succeed and grow in the coming years. Again, there are some IRS stipulations that complicate this type of investment. The government prohibits you from benefitting from the business in any way, prior to your retirement. This means you cannot draw a salary or share in gains directly. Similarly, your close relatives are also prevented from making transactions via the IRA.
While the potential for gain is certainly present, this can also pose a greater risk than other investments. Instead of dividing up your funds among the various companies supported in a fund, everything is invested in the success of this one business. If the company fails or even shows a minimal profit, you may either lose all of your investment capital, or your gain could be far less than that which you had anticipated.
There are many other options for investing your IRA funds, aside from the traditional mutual funds and individual stocks. Before choosing any investment strategy, it’s important to educate yourself about the IRS stipulations concerning that type of investment, as well as the risks you’ll be facing. If you feel confident that the investment will bear out and you’re comfortable with the risk, proceed with the opportunity. Whether it’s investing in rare items, like artwork and coins, or in business ventures and real estate, it’s up to you to pursue a strategy that will ensure an adequate nest egg for your retirement.
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