The Dos and Don'ts of Investing in an IRA
Most people understand that investing in an IRA is a wise decision, but it's important to remember that simply investing your money is not the way to an easy, early retirement. It's important to make sure that all of your money is invested wisely if you are going to be able to retire as early as you want to retire.
Choosing to go with an IRA for tax reasons is a great place to start, but you still need to make sure that your money is put into the right investment vehicles. Here are some important dos and don'ts to remember before you get started with your new IRA.
DON'T: Put Risky Assets in Your IRA
Your IRA is going to be the money that you use to live once you are done working, so you need to make sure that it will actually be there for you when you need it. Try to avoid the temptation for high-risk, high-reward assets for your retirement fund. There is nothing wrong with throwing in a few speculative options while you are young, but the vast majority of your IRA needs to be invested in safe, reliable investments that will almost certainly be there for you when you are ready to call it quits.
DO: Think about a Self-Directed IRA
Many people are turning to a self-directed IRA to handle their funds because they want to have complete control over their retirement accounts. While this can be a solid option for some people, the reality is that most people do not know how to invest their money wisely. You definitely shouldn't hand over your money to someone else if you feel like you will not be able to trust them to provide you with a return, but you also need to make sure that you understand the risks of running your own IRA if that is the route that you wish to take. At the end of the day, this is the perfect option for someone who wants to have complete control over their retirement funds.
DON'T: Be Afraid to Bet Heavy
One last thing that needs to be mentioned when it comes to your retirement fund is that you cannot be afraid to put all your eggs in one basket. While most people warn against this kind of action, the fact of the matter is that diversifying usually means that you are not going to see much of a return over the long term. Famous investors such as Jim Rogers, Warren Buffet, and Marc Cuban have all made statements in opposition to diversification, and these guys believe that you have to be willing to bet on what you believe will happen if you are going to see any kind of return on your investment. It is important to remember that you have to take some risk if you are going to get any kind of reward on your savings.