Funding an IRA Account with Alternative Investments

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Whether you’ve been diligent about funding your retirement account for years, putting away the recommended 10% of your paychecks into an IRA or 401K, or if you’re just starting to save at 25 or 26, the last thing that you want is to watch your hard-earned funds dissipate into fees, or completely tank into nothing during a stock market crash. So what do you do to protect yourself? Diversify, and invest in alternative investments that are outside of the stock market. You have options when it comes to investing, but as with any investing, there are pros and cons when it comes to risk and reward.

The IRA Investments
For decades, IRAs and other tax-deferred retirement plans, like a 401K, have been used to fund retirement accounts for millions of Americans. In most cases, these accounts are funded with investments like stocks, bonds, mutual funds, unit investment trusts, CDs, treasury securities, and fixed, indexed, and variable annuity contracts. Other less common investments such as mortgage-backed securities, precious metals IRAs, and real estate investment trusts (REITs) have at times been used by the more savvy investor.

There are certain types of investments have always been prohibited inside IRAs and qualified plans, such as life insurance, collectibles and antiques, and real estate that is being used by the IRA owner. These restrictions are found inside the IRS Code and cannot be breached under any circumstances.

New Trends in Your IRA
Although this category of investments is hardly appropriate for everyone, it has become appealing for more and more investors in the wake of the market meltdowns over the past few years. Those who have seen their retirement account balances shrink to a fraction of what they were in the ’90s have become more inclined to seek alternative avenues that have little or no real correlation to the stock and bond markets. These investments offer the potential of substantial gains for those who are able to absorb their risks.

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