Picking an Investment for Your IRA

Choosing the proper IRA investments can make a big difference in the quality of life that you enjoy upon retirement. There are many investments that you could choose as part of your portfolio. Here are a few things to consider about choosing investments for your IRA.

Available Investments

The government allows many different things to be used as investments for IRAs. In fact, there are only a few things that they specifically prohibit. You cannot invest in life insurance policies, collectibles or any personal property. (An example of personal property is a house in which you reside or will someday reside as opposed to real estate bought only for investment purposes.) Beyond those restrictions, you have a lot of investment options. Here are a few factors that you will want to consider about an investment before you make it a part of your portfolio.

Safety and Performance

One of the most important criterion to look at is the safety of the potential investment. When you are investing for your retirement, you want to be as safe as possible. You do not want to risk your money in an investment that has a high possibility of failure. If you start early enough, you can use slow and steady investments to build up a nice portfolio with minimal risk. While you may want to speculate on risky investments outside of your IRA, your retirement money is nothing to gamble with. 

You also want to choose investments that have shown a consistent history of performance. You want something that will provide you with a nice return and do it consistently. Using time-tested methods of investment is usually the best strategy so that you can be more confident about the possibility of success.


Something else to bear in mind is the advantage of having a diversified portfolio. You should never put all of your money into one particular form of investment. Many investors get in the habit of using all of their money to buy stocks. Yet while stocks are a good thing to include as part of your portfolio, they definitely should not be the only investment. The stock market could crash tomorrow, and your entire retirement could be gone. Put some money into several different forms of investment as you go. This strategy should help you weather difficult financial markets. In other words, you will be better able to build and hold onto your retirement funds if your portfolio is diversified.

Popular IRA Investments

  • Stocks--One of the most popular investments for IRAs is stocks. Buying stocks gives you partial ownership in a company. With stocks, you can make money from dividends and from the increase in the stock price over time.
  • Mutual funds--Mutual funds are a great tool for those investing for retirement. Mutual funds provide you with an investment that is already diversified for your portfolio. It can provide steady growth in your account.
  • Bonds--Bonds provide you with a low-risk form of investment. You are lending your money to a corporation or government, which provides you regular interest payments in return.
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