The good, the bad and the ugly

Are IRAs Good Investments? Okay, yes! Basically, anything that allows you to build wealth for your retirement is, but ultimately…relying on the stock market for IRA investment growth is riskier than ever.

While stocks and mutual funds are good IRA investments, in most people’s opinion, they just aren’t performing as 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 some good stock options or invest in a safe, low-risk mutual fund, but also look into other investment vehicles, like real estate. Many of us are beginning to think that houses and other property are good IRA investments. Because the earnings potential is great and our earnings are protected from capital gains taxes.

With the traditional account, taxes are deferred until you make withdrawals. With a Roth, withdrawals aren’t taxed at all, because the contributions were taxed as regular income. Therefore, one way to ensure the growth of IRA investments is to continue reinvesting interest earned and profits earned, if only for tax savings.

Most types of property make good IRA investments, but the best ones are all-cash deals, meaning you have the funds in the account to purchase the property outright. Your account can have a mortgage, as long as it’s a non-recourse loan (only the property is used as collateral, not the account itself), but there are downsides.

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

People used to rely on certificates of deposit and bonds to ensure 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 prosperous retirement, you may need to take a little risk. Real estate values ​​are low right now. Properties are being foreclosed on across the country. Many properties are coming up on the auction block.

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

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

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

Joe Fazchas is a Real Estate investor as well as the owner and founder of www.iLOCAdvantage.com, a company that partners with private individuals and lending corporations across the country for the sole purpose of financing and/or rehabilitating investment properties. . All of which is done using a proven turnkey Real Estate system… The ILOC IRA.