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What Can You Invest a SEP-IRA In?

What Can You Invest a SEP-IRA In? Posted on March 4, 2017Leave a comment

You can invest your SEP IRA funds in stocks via a bank, brokerage, or other financial institution. As with any stock investment determination, it is advisable to diversify–to put funds in the stock of more than one company.

It is even a good idea to diversify as to industry sector. For example, if in a given year the manufacturing sector does not do well , your consumer-goods stocks might keep the entire portfolio from sinking.




In addition, as the stock markets can prove erratic, it might not be a good idea to put all your SEP-IRA money into stocks. The financial institution at which you establish your SEP-IRA is likely to offer a broad range of stock investment choices. If you need investment guidance, consult with a financial professional.


Bonds have a reputation as a more stable investment than stocks, providing lower return for lower risk. However, their performance can also prove erratic. Your SEP-IRA institution might provide choices of corporate, municipal, county, or state-issued bonds.




Because bonds are likely to provide a lower rate of return than other investment choices are, they can prove a better choice for money that will remain in place for long periods. When considering your options, keep in mind that the IRS requires that you begin withdrawals from your SEP-IRA account by age 70 1/2.

Mutual Funds

Mutual funds may be made up of stocks, bonds, or a mix of the two. A fund also can include other types of securities. Your SEP-IRA institution is likely to offer a range of mutual funds.




You will usually find that the bank or brokerage has rated the funds as to risk. The mutual fund provider might group stocks into a fund based on industry, region, or stock or bond category. For example, an emerging-market fund might include the stocks of similar types of companies from a number of emerging-market countries.




When choosing mutual funds, investigate thoroughly. Though past performance is never a guarantee of future results, it is still advisable to look into that performance carefully. Take your time when making a mutual fund decision. Consider the reputation of the fund provider, as well as trends in the country, the region, or the industry of the fund itself.


“You can set up an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company,” according to the IRS. To prevent abuse, “contract must provide that contributions cannot be more than the deductible amount for an IRA for the year,” according to Publication 590.




In addition, if any premiums are refunded to you, you have to put that money back into the annuity, whether to purchase additional benefits that year or “to pay for future premiums.”




Moreover, the contract must provide for premium flexibility so that your premiums will rise or fall with your income level. Further, the annuity contract has to be non-transferable and non-forfeitable. Be sure your life insurance company understands the strictures of IRA annuity contracts before you make the purchase.


An option is a “…financial derivative that represents a contract sold by one party (option writer) to another party (option holder),” according to The contract gives you the option of buying or selling an asset “at an agreed-upon price” by a certain date.



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