Sorry I don't totally understand it yet & was just trying to figure this out.
2007-05-14 15:53:43 · 7 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
The risk is the same as a non-Roth IRA if that is what you want to know. What investments you have IN the IRA carry the risk of that investment.
2007-05-14 16:10:16 · answer #1 · answered by Blitzpup 5 · 2⤊ 0⤋
The Roth IRA is a type of account, not a particular investment. You open a Roth just like you would open a checking account or brokerage account or savings account. Then you choose what investments to put into it--you can hold cash, stocks, bonds, mutual funds, ETFs, index funds, or even real estate in your IRA. So each investment carries some degree of risk, but the Roth in and of itself has no risk. It's just where you put the investments.
2007-05-15 00:36:44 · answer #2 · answered by lizzgeorge 4 · 1⤊ 0⤋
Yes. The risk is in the type of investment not in the type of account. The type of investment can vary from a low risk savings account to a high risk stock portfolio. The type of investment you choose is where you look to determine how much risk you're going to experience. The Roth IRA account doesn't make the investment any more or any less risky. The Roth IRA designation simply affects your tax and estate situation.
2007-05-14 23:05:43 · answer #3 · answered by Sandi Lansing 2 · 2⤊ 0⤋
You have to separate this into 2 things - A Roth IRA is a tax vehicle. The money you put into goes into an investment fund of some sort.
So, the real question is does the underlying investment vehicle have risk. That depends on what you invested in.
Government bonds (at least when held to maturity) and certificates of deposit have virtually no risk.
Corporate bonds have more risk than govt bonds.
Stocks and stock mutual funds do have a risk that they go down, but they also tend to go up more than a CD or bond.
2007-05-15 11:50:29 · answer #4 · answered by Quixotic 3 · 0⤊ 0⤋
The money you put in your Roth IRA is placed in some type of investment. For example, it may be in a money market account, mutual funds, stocks, etc. Each of these investments has a level of risk. Some are more risky than others. Depending on your risk-tolerance and the time you have before retirement you may choose a more risky investment of your retirement funds.
Good luck.
2007-05-14 23:02:04 · answer #5 · answered by Freedom Rings 1 · 1⤊ 0⤋
A Roth IRA is not an investment. It is an account that holds investments.
The term "risk" typically refers to an investment....not an account.
Also....ALL investments have risk.....even FDIC insured bank accounts.
The trick is determining what type of risk you're trying to avoid. If you are fighting purchasing power risk then you'll want to avoid FDIC investments.
2007-05-15 09:52:52 · answer #6 · answered by derek 4 · 0⤊ 0⤋
This is an investment account, so yes, there are risks.
If you invest in some stock or mutual fund, and if the value of it goes down, so as your balance. You can even get wiped out, if you are not careful - but that is true for any investment. (not limited to IRA)
Another "risk" is, once you put your money in it, you can not take it out except for rare cases without paying penalty UNTIL you reach your retirement age. This is true for any retirement account.
The benefit is, because you can't easily take the money out, you are likely to keep it there and let the compounding of interest and growth of the investment take its course, and tax free.
2007-05-14 23:04:56 · answer #7 · answered by tkquestion 7 · 1⤊ 0⤋