Should You Buy REITs in a Roth IRA?

Key Points

Consider REITs for Roth IRAs due to their compound growth and tax-free profits.
Roth IRA withdrawals are tax-free in retirement, maximizing REIT dividends and sales gains.
You could choose a Roth IRA if you're in lower tax bracket now, or a traditional IRA for immediate deductions.

Real estate investment trusts, or REITs, are excellent candidates for retirement account investments. The tax-advantaged nature of retirement accounts can magnify the already tax-advantaged nature of REITs, which can result in some powerful long-term return potential.

Here's a rundown of what investors should know before deciding whether buying REITs in a Roth IRA is the best move for them.

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Paper with IRA traditional and Roth printed on it. Roth is circled in red pencil. — Image source: Getty Images.

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5 Steps to Open a Roth IRA

To open a Roth IRA, you'll need to choose a financial institution, deposit funds, and decide how to invest your money.

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A deep dive into the returns of real estate investment trusts versus other investment options.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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