When investors think of an Individual Retirement Account (IRA), they often think only of the stocks, mutual fund, money markets, bonds, annuities and CDs that they already know they can invest in within the IRA. But IRAs offer many different opportunities for investment that you might not even be aware of. (To learn more about IRAs, read For IRAs, Time Is Money.)

Coins
If you are interested in an investment that doesn't provide an income but instead grows in value over time, then you might want to consider adding gold, silver or platinum coins to your IRA. Many investors concerned about choosing stocks and worried about economic shifts in future years find investing in tangible items like coins to be comforting.

Alternative Investments
Though not for the faint of heart, alternative investments like hedge funds, derivatives and venture capital can be used as investment options within an IRA. While many of these investments require a higher level of financial sophistication to help sort through the available options and drawbacks for each, their higher risk is acceptable to some investors.

It is important to note that some custodians might not allow certain riskier investments, such as uncovered options, in a retirement account. In addition, the IRS will consider certain venture capital investments to be prohibited, namely if the IRA participant owns a certain percentage of the business receiving the venture capital. (For more, check out IRA Assets And Alternative Investments.)

Precious Metals
Coins aren't the only tangible investment option for IRAs. You can also consider the purchase of precious metals like gold or silver within your account. As with the coins noted above, investing in precious metals will not create an income source but an asset that grows in value over time. It is also important to note that their value can change daily and may require a valuation annually.

Rental Property
Did you know you can buy real estate, including rental properties, in your IRA? This is a complex transaction and certain caveats must be met, so it's important that you work with an advisor when attempting this transaction. You must have enough liquid assets within your IRA to fund the entire investment (or at least a down payment) and all maintenance costs. There may also be additional transaction fees imposed by your IRA custodian. This is an interesting investment for those who are looking to create income rather than sit on investments that may or may not gain value over time, but it also introduces some complexity in managing the property and ensuring that units remain continuously rented.

Promissory Notes
Another option for a sophisticated IRA investor is promissory notes. Promissory notes are promises to repay a debt with interest, and are purchased from brokers or private individuals. In this situation, the note would remain with the IRA custodian and the IRA would receive all principal and interest repayments. Once the note was paid off, it would be considered satisfied and no further payments would be necessary.

Promissory notes can be secured (or backed by collateral) or unsecured, depending on the trust level of the IRA participant. (For more alternative investments, check out Alternative Investments In Your IRA.)

The Bottom Line
Before they are taken advantage of, there are many different aspects of an investment that need to be considered. Because IRAs are meant to protect and grow a nest egg designed to provide an income throughout your unpredictable retirement, your risk tolerance, age range and proximity to retirement needs to be considered before any investments are chosen. In addition, investors should continue to take steps that diversify their retirement accounts and hedge against the losses that some of their investment choices may introduce. As important as growth is to an IRA, conservation is a big deal too.

Check with your IRA custodian to see which items they allow within an IRA with their firm. (For more on how you can retire better, read Tips On How To Use IRAs To Boost Retirement Savings)

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