IRA INFO: What to do and what not to do

Most people tend to procrastinate when it comes to investing and an IRA. One reason why is there are so many choices when it comes to picking the right IRA for your needs. There are three type of IRAS to look at when making your decision--the Roth, the deductible IRA, and the nondeductible IRA--all of which have totally different options and eligibility requirement depending on your needs.

With so many options to choose from many people just choose to not do anything at all.

Here are some dos and dont's to keep in mind when choosing the right IRA for you.

DO:

Think of picking an IRA as a way to take control of your financial portfolio against an unpredictable market. You cannot control the market's ups and downs, but you certainly can make sure that your investments are as good as they can be, keeping your investment costs low, and also make sure you take advantage of every tax-sheltered opportunity available to you, such as contributing regularly to your IRA.

Consider tax-managed funds. If the IRA Calculator tells you that you're eligible to contribute only to a traditional nondeductible IRA, yet another option to consider is a tax-managed fund. Planners often steer those who earn too much to contribute to a Roth to a nondeductible IRA, but you'll have to start taking withdrawals at age 70 1/2 from the IRA. A tax-managed fund, by contrast, offers no such strictures but offers the same tax-deferred compounding.

Dont's:

Forget about your spouse. When your married you and your spouse both can setup IRAs
helping you invest even more for the futre. A so-called spousal IRA is an option as long as you file a joint return and the working spouse is earning enough to cover the earnings qualifications to fund both his and her IRA contributions.

Assume you need a lot of cash on hand to invest in an IRA. Your 2008 Contributions can be spread throughout the year to help make it more affordable. Such a strategy, called dollar-cost averaging, which helps ensure that you're not putting money to work when the market's peaking. This option also makes an IRA a more affordable option for those who don't have the full contribution amount on hand. Your Broker can help you set this up to where you can average it out, you can afford to invest more smartly.