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- 1). Select the companies whose stock you want to purchase. Buying and selling stocks in an IRA account is very similar to purchasing or selling stocks in a traditional investment account. However, you are capped by the contribution limits (meaning you cannot suddenly invest more than is allowed by law per year), and you also cannot buy on margin, which is essentially buying on credit. Research companies as you normally would, taking into account the products they make and how successful they are in their given sector.
- 2). Find a balance for your portfolio. One of the tricks to an IRA account is buying and selling stocks in harmony--when building a stock portfolio, it is ideal to purchase companies over a number of sectors. A sector is an industry, such as health care, technology, or pharmaceuticals. By spreading your investments among different sectors, you are helping to guard against a market downturn in any one stock or sector.
- 3). Look for stocks that pay dividends. A dividend is a payment from a company to an investor for investing in its stock. Dividends can help bolster your IRA portfolio in both lean and strong times by guaranteeing some payments. For instance, if you own 1000 shares of Company X and it pays a dividend of $2 per share per year, you will receive $2,000 per year just for owning that stock. That is money you can re-invest in your IRA in the form of stocks, bonds or mutual funds.
- 4). Execute the trades. Trading within your IRA portfolio is virtually the same as trading in a regular account, although your IRA account and regular brokerage account will be two separate accounts even if they are with the same brokerage house. These brokerage accounts can be either housed online or traditional accounts where you contact a broker to make a trade on your behalf.
After you find the company whose stock you want to purchase or sell, you will decide the number of shares you want to buy or sell with a market or limit order and enter the order, or direct your broker accordingly. A market order means the trade will be executed at the current market price, while a limit order means that the trade will be executed only when the stock crosses that price barrier. - 5). Build Rome over time. The old adage of "Rome wasn't built in a day" certainly applies when it comes to building your IRA. The purpose of the IRA is to build value over decades to be there when you need to retire. Therefore, do not go crazy trying to buy every stock at once. Decide to purchase one to two stocks per year as you build your portfolio. This will give you sizable positions of $2,000 to $3,000 each. As those investments grow, you can buy and sell larger blocks of stock.
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