The answer is yes but there are things to consider.
Whether you already have a Roth IRA or are thinking of opening one it's wise to consider how you will invest it.
Part of this means knowing what you can even invest in.
If you are a fan of stocks you probably asking yourself "Can I buy stocks with my Roth IRA", the answer is yes and no. It depends on where you opened your Roth IRA and what rules and restrictions they have on your account.
Rules, Regulations, and Restrictions
Even if they do allow you to choose individual stocks to invest in there are still regulations that you have to follow.
Like all investment vehicles there are rules and restrictions, and making wise and legal investments requires that you do some research. For example if you don't follow some of the rules created by the IRS for IRA investing you could be hit by a penalty.
Roth IRA vs Regular IRA
The Roth IRA is a special type of IRA, but a lot of the same rules apply, so we can general your question to not be Roth specific: Can I buy stocks with my IRA?
The short answer is still technically yes. That's because in general, an IRA allows investments in all kinds of financial vehicles. You are probably already familiar with the fact that your IRA can be composed of mutual funds.
But what you might not know is that you can also invest and IRA into mixed assets, and Exchange Trade Funds, usually abbreviated as ETFS. There are also certificates of deposits and even real estate, and yes - stocks.
In theory you get even more eccentric than that, but then you might get into some questionable territory. For example you should not invest your IRA into your own real estate. Also life insurance is not allowed as an investment.
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At an Abstract Level You Can Invest in Anything
In practical terms though it's safer from a legal perspective and simpler to stay within some of the more common investment vehicles like mutual funds and stocks. While technically you could invest in stocks from a legal angle that doesn't mean that the company providing you with your IRA allows it. So the first thing you should do is contact your provider and ask whether they permit that kind of invest investment.
If they do there are still other things to keep in mind. For example a lot of stock investors don't just choose their stock once and leave them alone, instead most people want to change the stocks they are investing in. This means what you really want to do is trade stocks using your IRA.
Let's answer that question then.
Can I Trade Stocks in My IRA?
Again part of the answer to this question depends on who you opened your Roth IRA account with and whether they allow it. And again there are regulations you have to follow and be aware of.
From a purely technical perspective though, yes you can trade stocks with your IRA.
As I mentioned before there are some rules you need to follow. One important rule whether you are investing in stocks or not is that you can't borrow from an IRA account. This puts some important restrictions on stock trading. For example it blocks short selling.
There's also a "3 day trade settlement rule". This means that unless you keep your trading to a very small percentage of your overall account balance you are probably going to run into the 3 day settlement rule. That's not good, it means you will get a "free riding" or possibly a "good faith" warning. Keep in mind this is only if you are trading on a pretty regular basis.
If your trades are at least 3 days apart you should be fine. You can usually see how much settled funds you have by looking at your online balances.
Getting Creative with Restrictions
If these rules and limitations are deal breakers for you there are ways to work around them. For example some brokers offer IRAs what's called a limited margin feature. This feature essentially avoids the settlement date restriction, meaning they waive the 3 day settlement period. Interactive Brokers and TD Ameritrade are two examples of companies that offer that feature.
Also while you can't sell your stock short you can buy inverse Exchange Traded Products, otherwise known as ETPs. For example SDS (-2X S&P 500) or even the SH (-1X S&P 500). Using options you can pretty accomplish the same thing you would with a short position.
Choosing the Right Stock to Buy
As far as what stocks to pick that is a question worthy of an article itself. In this case regular stock advice applies, do your homework and choose your stocks wisely. Remember that an IRA is a retirement investment account, keep that in mind when you are choosing which stocks to invest in.
Here is a YouTube video with more information: