The Good, The Bad and The Ugly

Are IRAs good investments? Well...yeah! Basically, anything that allows you to create wealth for your retirement is, but lately...relying on the stock market for the growth of IRA investments is riskier than ever.

While stocks and mutual funds are IRA good investments, in most people's opinions, they just are not performing that well right now. If you read the financial news, you will see that values are falling across the board. Of course, there is no way to guarantee the growth of IRA investments, but through proper planning and diversification, you can improve your chances.

So, stick with a few good stock options or invest in a secure low-risk mutual fund, but also look at other investment vehicles, such as real estate. Many of us are beginning to think that houses and other properties are IRA good investments. Because, the profit potential is great and our profits are protected from capital gains taxes.

With the traditional account, taxes are deferred until you make withdrawals. With a Roth, withdrawals are not taxed at all, because the contributions were taxed as regular income. So, one way to insure the growth of IRA investments is to continue to reinvest interest earned and profits made, if only because of the tax savings.

Most kinds of properties are IRA good investments, but the best ones are cash deals, meaning that you have the funds within the account to buy the property outright. Your account can hold a mortgage, as long as it is a non-recourse loan (only the property is used as collateral, not the account itself), but there are disadvantages.

First of all, you have to look at the amount of overall interest that would be paid and compare that to the profit or earning potential. Second, unrelated business income tax (UBIT) may be due on the profits. So, in a way, you lose the tax benefits of using IRA funds.

People used to rely on certificates of deposit and bonds to guarantee the growth of IRA investments. While these are very safe investments, the returns are very low, currently not even enough to keep up with inflation.

If you want a secure and wealthy retirement, you may have to take a little risk. Real estate values are down right now. Properties are being foreclosed on all over the country. Many properties are going up on the auction block.

While it is a sad situation for those who have lost their homes, it can be good for investors. If you can get a house with an assessed value of a half million and pay only $300,000 cash, then you have technically made an instant profit.

Since, your long term goal is the growth of IRA investments and the funds in the account, there is no need to sell the property quickly. You can hold it within the account and earn rental income until the market recoups or you find a buyer.

These are just a few examples of what we think are IRA good investments. There are lots of possibilities. Just use your imagination!