A piece in The New York Times look at the increasing willingness of investors to get creative with their IRAs. Consider this amusing example:

BRIAN HARRIS makes a 30 percent annual return on his Roth individual retirement account, but his money is not invested in a soaring biotechnology stock or a hot currency fund.

Instead, Mr. Harris, a music teacher from Tucson, owns about 25 marimbas, xylophones and timpani. Using the money in his retirement account, Mr. Harris buys the instruments for less than $1,000 each. He then rents them to his students for up to $60 a month. The rental income flows straight back into the I.R.A.

Hmm .... While that sounds tempting, there are ample reasons for most investors to avoid these self-directed IRAs. For starters, you're unlikely to be able to achieve much diversification owning traditional real estate or similar assets in an IRA -- If you want real estate exposure, go with a portfolio of REITs. The idea of investing in racehorses through an IRA seems insane. This is supposed to be your retirement money!

The best bet for an IRA remains low-cost index mutual funds. There are plenty of places for more speculative and creative investments -- the IRA isn't one of them. In addition, unless you have a ton of money in your IRA, the transaction costs of alternative investment will probably be prohibitively high.