These 7 Smart Picks Belong in Your IRAhttp://www.fool.com/retirement/iras/2011/07/15/these-7-smart-picks-belong-in-your-ira.aspx Dan Caplinger
July 15, 2011
Three months ago, plenty of investors got in under the deadline to make yearly contributions to their IRAs. But it's not good enough just to open an account and deposit some money. To make the most of your retirement account, you need to make the best investments you can -- and avoid ones that don't make sense.
Why IRAs are smart
Despite the current tax savings, the true value of an IRA comes between now and when you retire. Throughout your working years, your IRA shelters any income within your account from tax. That means you can earn dividends, sell shares at a profit, and get paid interest in an IRA without worrying about the tax implications.
What doesn't belong in an IRA
That makes shares of nondividend growth stocks a double-edged sword for IRAs. You could own shares in a regular taxable account, and if you held them for the long term, you'd pay only 15% in capital gains taxes. Within an IRA, however, you'd pay rates as high as 35% on the same income.
Get these stocks into your retirement account
Let's take a closer look at three categories of investments that fit better in an IRA than elsewhere.
1. Real estate investment trusts
Of course, mortgage REITs aren't without risks. They're highly leveraged and sensitive to interest rates. But if you think rates will stay low for the foreseeable future, thanks to a sluggish economy, then the healthy income they provide could well be worth the risk.
2. Precious metals
The benefit of owning precious metals in a retirement account, whether it be through physical bullion or via exchange-traded funds like ETFS Physical Palladium (NYSE: PALL ) or iShares Silver Trust (