Trading Stocks In Your IRA

For some reason, I've been having a lot of questions from my readers about trading stocks in your IRA. Trading stocks in your IRA is no different than stock market investing in general. An individual retirement account is a creation of the tax code and acts as an umbrella for a brokerage account. While you can trade in stocks within your IRA, the IRA itself governs the tax treatment of the contributions, the gains and the distributions. The actually underlying brokerage account allows you to trade stocks like you would in a normal individual stock account. The only difference is that you have to designate what type of account you want when you open an account with your broker. After that it works. the same.

Taxation and inflation are two of an investors worst enemies. By trading stocks in an IRA, you can conquer the first enemy by avoiding taxes on your gains and by trading stocks in your retirement account, you can give yourself a hedge against inflation. That's because stocks over the long haul have outperfomed inflation.

Besides trading stocks in IRA's, you can also invest in bonds, real estate, options and more. The way you fund your account is up to you. I know that when I first started becoming familiar with IRA's alot of people at the bank put their funds in certificates of deposit. I wouldn't do that at my age now, but maybe if I was retired and couldn't afford to risk my money in stocks, I might feel differently.