Which is more bang for the buck; cd's or ira's?

Answer 1

Sort of like comparing apples and oranges. A CD (Certificate of Deposit) is usually a very safe, but not very good return on your money. I would say do a money market account. Most banks offer an introductory rate for six months that are higher then CD's, without having to lock your money in for a certain amount of time.

An IRA (individual Retirement Account) is used for tax reasons. the IRA would invest in stocks, bonds, mutual funds, or even CD's itself. You use this account to either grow money tax free until you retire, or you use a Roth IRA to pay taxes up front and have the account grow tax free.

If you have a small amount to invest and do not want to lock it up, I would say put it in a money market account. If it is long term planning you are looking into, contact a financial advisor in your area. Most will meet with you for free on an initial consultation. They can recommend what fits your situation the best.

Good Luck

Answer 2

CDs are short term investments that are very safe -- so have a relatively low return. You have to pay ordinary income taxes on the interest earned.

With an IRA, you can invest in anything -- including long-term riskier securities that have a much higher average payoff. The real advantage to IRAs is that you don't have to pay interest on earnings until you take out the money. There is a penalty for early withdrawal (these are set up for retirement).

Answer 3

First decide when you will need the money. Then read to discover what an IRA is and how it can be used. Then look for an investment that fits your needs. If you decide to go into an IRA see if there are mutual fund companies that will accept the level of funds you wish to invest and get some guidance from them. T Rowe Price, Vanguard and Fidelity come to mind.