Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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What is NOT considered an acceptable investment for an IRA?

ETFs
Real estate
Stocks
Precious metals

The correct answer is: Real estate

An IRA (Individual Retirement Account) allows a range of investment options; however, certain investments may not be permitted within the account. Real estate, while it may seem like a viable option, is generally not an acceptable investment by most custodians for a self-directed IRA, particularly when it entails direct ownership. This is primarily due to the management implications and the IRS regulations surrounding unrelated business taxable income (UBTI), which can arise from certain real estate investments. ETFs, stocks, and precious metals are commonly accepted within an IRA. ETFs and stocks provide liquidity and can be traded easily, which aligns with the goals of many investors. Precious metals, if stored correctly and meet specific purity requirements, are allowed as well. Ownership of real estate typically requires more active management and can complicate fiduciary responsibilities. Therefore, it is excluded from the accepted list of investment types for most traditional IRAs, making it the correct answer in the context of this question.