Does it make sense to buy stocks in your IRA?

Answer 1

yes, if you have enough assets in your IRA to make sure you are properly diversified--at least 10 different stocks in different asset classes and if your horizon is far enough out--at least 5 years. Otherwise it is a better idea to invest in mutual funds or index funds to provide the needed diversification. Debt instruments in IRA accounts are ok investments because the interest is tax deferred or tax free depending on the IRA account. In fact if your investments outside of your IRA account are mostly stocks, then debt instruments inside an IRA account is even better because it adds stability and tax deffered income to your investments.

Answer 2

It makes sense to add stocks to your IRA if you have a longer (10+ years) time horizon, and are a disciplined and sophisticated investor. Can you research a business, understand its financial statements, and estimate the fair value of a stock? Then go for it.

Otherwise buy a competently-managed mutual fund. But beware that you will be paying from 1%-5% annually in loads or operating fees, whether or not your fund's price rises in value.

Answer 3

Stocks can provide more growth than bonds or cash. Your IRA should hold your serious long term money. Since this is a long term investment, stocks are appropriate.

The best way to buy stocks is through mutual funds. The mutual fund companies will even set-up your IRA for you. You can make regular (monthly or weekly) contributions to your account and when you retire, you can easily pull your money out because it is liquid.

Answer 4

Yes.
I'd invest that IRA money in a diversified portfolio of good stock mutual funds.

Answer 5

You MUST unless you enjoy failure. Banks always fail to beat inflation & the eventual tax. Lenders always fall behind equity holders over time. There is no decision here at all.

Answer 6

Absolutely! Stocks can provide growth...bonds cannot. Stocks which generate dividends can increase their dividends........bonds cannot.