Investing isn't just about what stocks to buy; you also have to know where to buy them. Making the most of tax-favored retirement accounts, such as IRAs, is crucial in saving the most you can for your retirement.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, takes a closer look at how to find smart stocks to buy for your IRA. Dan notes that IRAs give you shelter from taxation on dividend and capital-gain income, thereby making it smart to put any high-dividend stocks into an IRA.

Dan discusses the differences between putting regular high-yielders Windstream and Frontier Communications versus niche investments like mortgage real-estate investment trusts Two Harbors and ARMOUR Residential , highlighting that the different tax treatment of various investments makes some more attractive within IRAs than others.


At the same time, Dan notes that you have to be comfortable with a stock's prospects, rather than simply dumping high-yielding dividend stocks willy-nilly into your IRA.

Dan concludes with some thoughts about the ability to use IRAs for short-term trading strategies when you think an investing prospect will pay off quickly.

Get the best stocks for your retirement
When it comes to choosing smart stocks for your IRA, your best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

The article Smart Stocks to Buy for Your IRA originally appeared on Fool.com.

Fool contributor Dan Caplinger owns shares of Two Harbors Investment. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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