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Little-Known Use for Your IRA
by Diane Butler
TheSyndicatedNews columnist

Diversification is key to investing. So say the gurus of Wall Street who handle our 401k’s and IRAs. Of course, their idea of diversification means giving them all your retirement money, letting them allocate it among the financial products they handle. Given the performance of Wall Street lately, going that route seems more a suicide mission than sound retirement planning. Is this what you really want to do?

With the collapse of the sub-prime market, the spread of the disorder to big financial houses like Bear Stearns and as far as the hitherto untouchable Asian markets, it’s getting harder to figure out how to prepare ourselves for retirement or even how to protect what we’ve got.

If you can’t trust [and you clearly can't] the Big Boys of Wall Street, who can you trust with your money?

Who do you trust to take care of your physical health? Doctors? Hospitals? HMOs? You’ve known the answer to that for quite sometime now. You take care of your own health. You take care of your own family because no one else is going to.

This is America, built on self-reliance. Who better to take care of your money than you?

Luckily, you do have a little-known option to allow you to invest your own retirement money. Did you know you can put some or all of your retirement funds into a self-directed IRA ? If you do that, then you can invest in whatever you want, even real estate. Create your own diversification.

That’s right. The IRS allows you to put your non-taxed retirement funds into IRAs which you then invest as you please. The profits are non-taxable, too, as long as they stay in the IRA. Just as in any professionally-managed IRA, you can’t remove the profits without paying taxes and penalties.

Of course, there are a few rules to follow, but companies offering the self-directed option will be happy to explain them to you, though not to offer any investing advice. Where you invest is up to you.

If you have looked longingly at the medley of short sales and foreclosures in your neighborhood or nearby, wishing you were able to invest, take heart. Now, you can! Use your self-directed IRA to invest in residential or multi-family properties, even commercial properties or land. You may not be aware of it, but tracts of land in Los Angeles County and many others are for sale at reasonable prices. Buy in small or large increments at today’s low prices with your retirement funds and collect on the accumulated equity 5 or 10 years down the road. You can do that, too.

Published: Jul 13,2008 19:33
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