LandBanking In Your IRA

The Federal government created the Individual Retirement Account program back in the early '70s. Since then, millions of Americans have decided that this tax-deferred way to put aside and grow funds for your retirement was a no-brainer.

The ABC's Of IRAs.
The first thing you have to understand is that not all IRAs are alike. There are traditional IRAs, simple IRAs, Roth IRAs, SEP IRAs, and Self-Directed IRAs (we'll have more to say about this last category a little later on), not to mention 401Ks, 403Bs and other qualified plans as well. While many aspects of these different IRA plans are similar, there are important differences.

What's In An IRA?
Since the vast majority of IRA accounts are invested in stocks, bonds and mutual funds, many people assume that IRA rules restrict IRA participation to these market-oriented investments. But in fact, no such restriction exists. It's actually as easy to invest part or all of your IRA money in real estate as it is to stay with these more conventional investment choices.

Why Haven't I Heard About This Before?
You probably don't remember seeing real estate listed as one of your IRA investment options.  That's because your current IRA account isn't the kind needed for investments outside the traditional financial markets - stocks, bonds and mutual funds. After all, your IRA is most likely with your  investment advisor or broker.

Isn't My IRA Already Diversified?
Your broker or financial advisor has no doubt  already told you to diversify your IRA investments...but in his world, that means buying a mix of stocks, bonds and mutual funds.  Real estate isn't his area of expertise, and in most cases isn't in his comfort zone (or his commission schedule).

So How Do I Add Real Estate To My IRA?
The first thing you have to decide is whether you feel real estate investing will fit into your retirement goals. Even investors who have no problem playing the securities markets with discretionary funds feel a lot less comfortable about trusting their retirement nest egg to the ups and downs of the Dow and other market indices. If the recent rollercoaster moves in the financial markets have left you uneasy, real estate may well offer a more stable alternative.

ChangeYour Portfolio By Changing Your IRA.
Once you've decided that you're ready to add real estate to your retirement fund, your next step will be to open a Self-Directed IRA. Don't worry -- it's no harder than opening a checking account. And it's the next topic we'll discuss.

NEXT: Self-Directed IRAs