If you're not happy with how fast your IRA is growing and you're willing to take on a little extra risk, you might be the perfect sort of person to engage in investing from within an IRA. Few people realize this, but your IRA money is not locked away in a vault; rather, you should look at it as a living trust of sorts, with plenty of options for you to grow it if you just take the initiative and learn the rules.
Even cautious investors should consider doing this with their IRA today. We may be entering a period of slowed growth and rapid inflation, and while CDs and other conservative investment tools have been stable and safe in the past, it's possible that they will lose real value rather than gain it over the long term foreseeable future. Investing from within your IRA, diversifying into more risky tools with a higher potential payoff, may make the difference between a comfortable retirement and one that's just scraping by for you.
In order to direct your own IRA investments, you need to talk to your bank or the financial organization that is currently holding your IRA. Investing from within an IRA is not at all like allowing someone else to manage it for you, and you may find that just learning the rules will take you some time. If your bank does not offer the option of administering your IRA without offering investment advice (that's part of the rules), look for a third-party custodial firm to administer your IRA.
Be sure to choose carefully who you want to administer your IRA investments, before you select an agreed upon administrator. Some custodial firms or banks charge a very nominal fee for this service, while others charge amounts up to $2,000 per year or more.
Think carefully about diversifying and how you'd do it with your IRA. Just as with any gamble, you don't want to bet everything you have on new investments. Instead, take a specific percentage of your IRA holdings to invest in riskier holdings like stocks or even venture capital. You can invest another small percentage in real estate, using Section 408 rules in the Internal Revenue Code. Investigate all the possibilities, and keep an open mind.
After you have outlined your options and chosen what you want to try, wait a year before activating these plans. The rules are somewhat twisted or complex and you want to give yourself time to make sure you haven't overlooked any important rules that will cost you more in fees and taxes than a profitable investment will pull in.
An exception to using the method of investing from within your IRA would be if you will be retiring sooner than ten years from the current time. It requires a good ten years to buffer the situation in the event of any substantial losses you might incur due to the fluctuating economy or the fact that your are just learning. These funds have by-passed part of the current slowing of the economy by having been around so long. They are nearly at their maturity which is going to enable you to cash in just like they are, very soon.
Another good point about investing from within your IRA is that it is an interesting and fun way to make a profit as long as you pay attention to the rules and the risks. You may be eager to try this more take charge technique towards managing your financial future, and if so, dig in and set up an appointment with your financial institution to discuss the changes in your plans. The money does belong to you and it is your privilege to save or invest it any you choose.
