(Photo Credit - Investment Zen)
Some invest in marijuana stocks for the short-term swings. Others are investing in the cannabis industry for the long haul. We often hear cannabis investors saying things like "I'm holding this stock until retirement!" Anyone looking to save for retirement should consider looking at IRAs.
Many investors see IRAs as just another a product that their broker is trying to sell them. In fact, an IRA is a type of account. IRA stands for individual retirement account. This type of account allows people to invest in a large variety of asset classes. The best part about an IRA is that it gives you tax benefits that traditional accounts don't have.
One question we are asked quite often is, "can I invest in marijuana stocks using my Roth IRA?" Not only can you use a Roth IRA to invest in stocks from companies in all sectors, but a Roth IRA can actually save you a massive tax bill down the line from marijuana stocks that experience significant price appreciation.
There can be some major benefits for investors who use a Roth IRA for investing in the cannabis industry, or any other rapid-growth industry for that matter.
The major benefit of investing in cannabis stocks through a Roth IRA is that if your investments appreciate, gains in the IRA are tax free. Even when you eventually retire and withdraw money from your Roth IRA, it's tax free since Roth IRAs are funded using post-tax income.
Holding stocks and other high-growth potential assets in your Roth IRA is by far the most efficient use of the tax benefits. Stocks tend to appreciate more over time than other asset classes, although Roth IRAs can be used to hold a variety of different investment types.
Not Just Stocks
One of the major benefits of a Roth IRA is the flexibility regarding the investments you hold. This may vary depending on the investment products that a given financial institution offers, but any major brokerage will give customers many options including bonds, and more. So what else is available to cannabis investors in a Roth IRA?
Beyond marijuana stocks, also mutual funds such as the cannabis-focused American Growth Fund Series II E. In addition to mutual funds, you can hold ETFs in a Roth IRA. While there is only one existing marijuana focused ETF right now up in Canada, there is a cannabis-related ETF expected to launch sometime soon here in the United States.
For a comprehensive database of marijuana related investments, be sure to check out our marijuana stocks database including cannabis companies listed on the NYSE, Nasdaq and more.
For those who are interested in opening up a Roth IRA, be sure to check out marijuana-stock enabled brokers such as Fidelity and E*Trade, which both offer Roth IRA accounts to customers.
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