The question that comes to mind if you have a small IRA is; what can you do with it? If you ask most successful IRA holders, they will tell you they started out with a small IRA and ended up with a large one. The tactic that led to their success is they started out with smaller, successful investments that they knew and understood. The stock market is just one of many avenues that you can invest your IRA into and it is easy for custodians of securities-based IRAs to provide investments of any size thanks to the rise of mutual funds and the ability to trade online.
However, you may not be sure on how to put your smaller IRA to work. Well, there are a whole lot of other investments that you can put in your IRA. Let us look at the following:
Leveraged real estate
You can use your IRA to borrow in order to buy property. You can seek non-FHA investment loans from some banks which offer it. When the IRA make a purchase, seller-financing can be negotiated. In some cases, you can collaborate with a private lender or even another IRA to lend the money, but the lender may not be a close family member or in other words, anyone directly related to you through your vertical blood line.
Real estate options
For those who understand real estate options, you can take low IRA investments that offer high returns at the end of the day. The terms of the option are determined by the IRA holder. The IRA can purchase an option that allows it to buy a quantity of real estate at a fixed price in the future. The price agreed on the option may surpass the price at a later date. In this case the IRA can exercise the option. This means buying the property. The IRA may still have a modest balance; and in this case the option can be sold to an unrelated third party. All of the funds would be returned to the IRA and are made available for the next investment, all of which are tax-free!
Notes and lending
You can invest in notes that are either secured or unsecured, but the terms are determined by the IRA holder. You may be restricted not to lend to close family members and all payments are required to be made directly to the IRA and the security of the loan is determined by you. This investment must be viewed by the IRA as a real investment from the set terms. Avoid terms such as low or no interest, no payments, balloon payments etc. as such would not be considered as real investment made by the IRA.