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

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Which of the following is an acceptable investment for IRA contributions?

Collectibles
Life insurance
Mutual funds
Gold and silver coins

The correct answer is: Mutual funds

Mutual funds are indeed an acceptable investment for IRA contributions. They provide a diversified investment option for individuals looking to build their retirement savings. Within an IRA, mutual funds allow investors to pool their money together to buy a variety of stocks, bonds, or other assets, which can lead to reduced risk and the potential for higher returns over time. Investing in mutual funds within an IRA also allows for tax advantages. Contributions to traditional IRAs can be tax-deductible, while Roth IRAs allow for tax-free growth and withdrawals in retirement. This flexibility makes mutual funds a popular choice among investors looking to maximize their retirement contributions and grow their investment portfolio effectively. On the other hand, collectibles, life insurance, and certain types of precious metals (like gold and silver coins) are generally not permitted as investment options within an IRA due to regulatory restrictions. These restrictions are in place to ensure that retirement funds are invested in a manner that is aligned with the long-term growth and stability typically expected from retirement investing.