The following is an excerpt from Beth Braverman | October 5, 2015 | Thefiscaltimes.com |
Individual retirement accounts are a great savings vehicle for millions of Americans, particularly for those who don’t have access to a 401(k) at work or whose employer-sponsored 401(k) has high fees or lousy options.
The potential for making investment mistakes in an IRA, however, is generally greater than the potential of doing so with a 401(k). That’s because IRAs tend to have nearly unlimited investment options. For investors who have a well-researched specific plan for their retirement assets, that can be a huge perk. For more novice investors, the array of possibilities can translate into a greater chance to do serious damage, especially in a volatile market like this one.
Here are the biggest mistakes people make when they try to “play investor” with their IRA:
Investing in Complicated Products
Most big financial services companies offer IRAs that allow you to invest mostly in mutual funds or individual stocks, but some smaller firms will set you up with a “self-directed” IRA, which you can use to invest in alternative investments, including everything from commodities to real estate.
Proceed with caution. While the administrators of your self-directed IRA will help you with the paperwork for the investments, it’s up to you to perform due diligence. If you aren’t comfortable paging through a P&L statement or grilling a business owner about his future revenue streams, you’re probably better off sticking with more vanilla investments.
For more visit: thefiscaltimes.com