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An individual retirement account is familiar to most when it is referred to by its abbreviation IRA. What most people are not familiar with, however, are the strategies you can use to crank up your return on investment. If you have an IRA, you need to invest the contributions in stocks, bonds or mutual funds, correct? Actually, this common perception is wrong. You can make far more money by actually investing in property such as homes, condos and so on. The average person will always invest in the stock market in some form or another with their IRA. The question is whether you want to be average when planning for your financial future. If not, you need to think outside the box. Every time I read about a new wealth building strategy, I do so with a healthy bit of skepticism. If it sounds to good to be true, it often is. This strategy, however, does not push any limits or validate itself because of a loophole. It is basic IRA planning. The simple fact is the law governing individual retirement accounts allows for a broad field of investments. You tend to only hear about mutual funds and stocks for one reason. That is what the investment firms are selling! They don’t make money on real estate investing. The nuts and bolts of the strategy are fairly simple, but the devil is in the details. In general, you open a self-directed IRA and use that vehicle to invest in property entities. Get it right and you can make a bundle. Get it wrong and it is a nightmare, so do this with professional help. Regardless, a self-directed individual retirement account works a bit different than the ones most people use. The account has a custodian who acts much like a trustee for a trust. The custodian can be a bank or other advisor and the fees are low. Once up and running, it is time to put money into the account. How you do this is entirely dependent upon your specific situation. You can roll money in from another account or perhaps just make contributions. Consult with your financial advisor for the best answer. Most people use their IRA to purchase secondary properties. The classic example is using the strategy to buy rental properties. Millions of Americans now own second homes, and the IRA strategy is a perfect way to pursue ownership. Heck, you can even buy an RV. From a procedural point of view, you do no actually purchase anything. The IRA does. Technically, the custodian of the IRA will sign on behalf of the account and so on. You then relax and watch your balance grow as rental payments come in or appreciation occurs. You might recall I mentioned the Roth option above. Yes, you can use this strategy with the Roth account. In fact, it is preferable. Why? When you retire, all distributions from the Roth will be income tax free. That makes for an excellent investment. You probably have a number of questions regarding this strategy. This article is admittedly a simplification of the strategy. To find out more and take advantage of it, speak with an advisor experienced in the field.
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Find out how using a self-directed Roth IRA can be used for wealth building at UFCAmerica.com. This article is available as a unique content article with free reprint rights.
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