When it comes to investing for retirement, an Individual Retirement Account (IRA) is one of the most popular options. IRAs offer a wide range of investment opportunities, including stocks, bonds, mutual funds, annuities, unit investment trusts (UITs), exchange-traded funds (ETFs), and even real estate. IRAs are similar to brokerage accounts in terms of the investments you can trade in your account. The IRS allows investors to buy and sell shares in a traditional and Roth IRA as they would with a brokerage account.
However, there are certain restrictions on IRA investments, such as using the IRA as collateral and purchasing collectibles, such as art, stamps, coins, and carpets. There are many strategies you can use to create a portfolio, but two of the most popular are investing in individual stocks and bonds or mutual funds or ETFs for better diversification and long-term results. Once you contribute to an IRA, you have access to thousands of investment options. You can choose the stocks, bonds, or funds you want, or you can keep some of the money in cash, CDs, or money market accounts. CPAs should emphasize investment vehicles for which established markets exist, such as stocks, mutual funds, bonds, bank certificates of deposit, annuities (although these may not be the best for an IRA since IRA funds are already tax-protected), real estate, and currencies.