Here’s what you need to know.īy keeping your IRA assets in a CD, you get a few advantages.
Your bank will usually offer higher interest rates if you agree to keep your money in the CD for longer amounts of time, though you may be subject to a penalty if you take it out before that time span expires. The way a CD works is that it offers you a fixed interest rate over a fixed period of time, usually between three months and five years. If you haven’t heard of it before, it’s a certificate of deposit that you hold inside of an IRA. That’s where an IRA CD can come in handy. But you also want that money to earn interest in the meanwhile. Or maybe retirement isn’t as near, but you want to take a break from the market’s roller coaster.
Yet as retirement starts to come closer, you may want to take some of your earnings from the stock and bond markets and place them somewhere less risky. You may have a traditional IRA or a Roth IRA, both of which are accounts that are focused on investing for the long term. If you’re saving for retirement, you may be investing already in an individual retirement account, or IRA.
