"Why is my IRA losing money?"

It's a darn good question. Your IRA is a personal retirement account, so what the money gets invested in is under your control. If you gambled the money on equities that lost value, your IRA loses value. If you had a 401K, you'd be much more limited in what investments you can make, but you can lose money in a 401K just as quickly as in an IRA.

If you talk to most Americans about the stock market, you'll hear over and over again that the market returns 10% a year. For a while back in the late 90's, people liked planning on 12% or 15%, but 10% was the long term figure. The problem is twofold. First, I believe the really long term figure for total return is closer to 8%, and that included dividends, back in the day when all real stocks paid real dividends. That's just not the case anymore. The other problem is to get a long term average, you have to have a number of bad years after a number of good years.

So today, if you pull up a chart of the S&P 500, perhaps the most popular and most sensible holding in IRA's and 401Ks, you'll find that it's been returning about 4% a year over the last 10 years, maybe 5% with dividends thrown in. If you only go back as far as the summer of 200o, you'll find that the S&P 500 has just got back to break even with that date, ie, zero return. So it depends a little on the exact dates, but you can say pretty safely that bonds (think PIMCO) have outperformed stocks over the past ten years, which is a bit of a shocker.

The funny part is that many financial "experts" at large companies are frantically trying to persuade their employees to get their 401K investments out of low returning bond funds and put them into the stock market, since without a higher return, they won't have enough to fund retirement. Of course, those "experts" are stuck in the world of 1990's bubble returns, and don't think America can possible go the way of Japan. The Japanese market peaked in the late 1980's and is currently at around one third of that peak value. So, if your IRA or your 401K is losing money, you better study up on your options, but not stock options, which are one of the limitations on retirement accounts. The government wants you to loose your money through managed speculation, not personal hunches.

Although we are typically limited to stock market mutual funds in our 401k we do have choices with our IRAs. By putting your money in a self-directed you have much more freedom and you are able to invest in the following

• Residential real estate—including apartments, single family homes, and duplexes
• Commercial real estate
• Undeveloped or raw land
• Real estate notes (mortgages and deeds of trusts)
• Promissory notes
• Private limited partnerships, limited liability companies, and C corporations
• Tax lien certificates
• Foreign currencies
• Oil and gas investments
• Publicly traded stocks, bonds, mutual funds
  
• Private stock offerings, private placements
• Judgments/structured settlements
• Gold bullion
• Car paper
• Factoring investments
• Accounts receivable
• Equipment leasing

Of course, any investment has to be approved and you should only put money into an investment you are comfortable with. Sometimes when going into an invest in something you will be told "invest in this opportunity with money you can afford to lose", you don't want to do that with your IRA money. Remember the only guaranteed investment is an FDIC investment and right now my confidence in that is not 100%. So you want to pick something that retains it's value or provides the cashflow/steady return you may be looking for.