2006-10-18 07:06:11 · 7 answers · asked by j4j1v 1 in Business & Finance ➔ Investing
This is an easy one. Go with a roth IRA. If you want that CD, then invest the Roth IRA dollars in a CD.
Some folks forget that the contributions that you make to a Roth IRA are eligible to be withdrawn immediately.
By the way, I'd put the money in a Roth IRA and invest those IRA dollars in a well diversified portfolio of good mtual funds...forget the CD for long term retirement investments.
2006-10-18 13:00:16 · answer #1 · answered by derek 4 · 0⤊ 0⤋
A CD (Ceritificate of Deposit) is an investment and can be part of a Roth IRA. Roth IRA can be all sorts of investments including real estate, CDs. Bonds, Stocks, Mutual Funds etc.
A Roth IRA is a great deal. Your investment should be based on what your timeline is for needing the money. Roth IRAs withdrawal rules are quite flexible including being able to pull your investment out (not the appreciation) tax and penalty free. For example, if you wanted to use the money to buy a house in 10 years you should invest in a balanced fund and after each year you should put a higher percentage in less risky (shorter term) investments.
2006-10-18 14:53:19 · answer #2 · answered by Cerebal 3 · 0⤊ 0⤋
There is no comparison, open a Roth if you have earned income and making less than the maximum. Over time, all of the money in that Roth will grow, given good investments, and will be tax-free upon withdrawal, assuming the account remains open for 5 years or more. Typically, you can expect between 4 and 8% growth or more, depending on your investment choices: stocks or mutual funds. Of course, you can always buy CD's within the Roth, but why would you, since stocks will outperform CD's in the long run.
2006-10-18 14:37:05 · answer #3 · answered by Anonymous · 0⤊ 0⤋
A CD is a guaranteed account. That is, if you put the money in at 5%, then at the end of the term, you'll get your 5%.
A Roth uses mutual funds to accumulate wealth. No guarantee. You MIGHT make 50% on your money if you pick the right fund(s), or you might lose 50% if you pick the wrong one.
Historically, mutual funds perform better than CDs. That doesn't mean yours will, but over all they do perform better.
Decide on how long you want your investment to work for you and the risk you wanna take.
2006-10-18 14:15:29 · answer #4 · answered by words_smith_4u 6 · 0⤊ 0⤋
The Roth all the way.
IF you make 5% in a CD in a regular account and you are in the 25% (generically speaking) bracket your rate of rtn on the cd is only 3.75%, since you have to pay taxes on it.
since a Roth is untaxed if you can find an equally safe 5% the rate of return is 6.25% because it will never be taxed.
2006-10-19 12:10:09 · answer #5 · answered by Nicholas M 3 · 0⤊ 0⤋
They are both good. I would max out my 401(k) first. Then max out the ROTH IRA. Next use CD's. You can also buy IRA CD's if you want and meet the criteria.
2006-10-18 14:13:32 · answer #6 · answered by gates_goins 2 · 0⤊ 0⤋
That depends on when you will want to take the money out. With both you have to pay taxes.
2006-10-18 14:10:36 · answer #7 · answered by hydroco 3 · 0⤊ 0⤋