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Jeff Fleming
Are I Bonds IRA-Compatible?
IRA rules are very specific with regard to the types of assets or investments that may be used to fund this particular type of retirement vehicle. Good news if you are considering these bonds for your IRA! Government I bonds are allowable as an investment vehicle in IRA accounts. Other allowable investments include stocks, government securities, certificates of deposit, mutual funds and annuities.
The question remains whether or not I bonds are appropriate for you as part of your IRA. The answer to this depends on many factors, including your risk tolerance level, the diversification of your current portfolio, and the probability of achieving your retirement goals. The first two are fairly obvious, but I wish to explain the last. Suppose you are a very conservative investor and that you have determined you will be financially unable to retire as soon as you had hoped. In that case, your circumstances may dictate that you invest more aggressively to achieve your goals in a timely fashion and your portfolio would be comprised of a smaller percentage of bonds. Nevertheless, government I bonds may be ideal.
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