Question about IRAs

[JohnCU]

I'm trying to get my plan straight for how I will invest money once I get out of college so that I will have plenty when I retire, and the first thing I'm looking at is IRAs. I've read about them, but I have one question: is it a collection of stocks you buy or is it like a mutual fund, or is it an account with a fixed rate of return?

Thanks.

 

[AaronP]

is it a collection of stocks you buy or is it like a mutual fund, or is it an account with a fixed rate of return?

an IRA can be any of those, you can get fixed rate IRA at the bank, something like a CD, a mutual fund IRA from a mutual fund company, or a stock IRA from a brokerage, or you can mix and match and have an IRA with stocks, mutual funds, just about anything you want in it.

 

[PsychoAndy]

your individual retirement account is exactly that. yours. you can divest it however you wish, stocks, bonds, money market, mutuals, tax free muni's, whatever you want

 

[linuxboy]

Guys, you are right. Often, people confuse tax benefits of IRAs with what they can actually be used for. The gov'ment just gets you a tax break for taking things into your own hands and investing (deduction on traditional and tax-free on the Roth when you take it out, after 59.5). You can invest it as you want. You can have an IRA and just keeping putting money to a CD or money market or another FDIC insured account.

Again, the IRA is nothing special, it's just convenient to put a tag on it and have tax stipulations added to it to ease estate planning. It can consist of whatever you want. Please talk to a professional if you need help or ask on these boards, people here usually know their stuff. Whatever you do, figure out your goals and tolerance for risk and then do research to be a smart investor. You already know about the benefits of starting early so get to it. 🙂


Cheers ! 🙂