2007-09-02 09:05:46 · 7 answers · asked by pokey 1 in Business & Finance ➔ Personal Finance
If you are looking at the long haul (retirement) you will want to go for the IRA, check out a Roth IRA.
If you are looking to make up to about 5.5%, on your money you can go for a CD. National City Bank has anywhere from a 7 day CD to 13-24 months. NOTE: the APY/APR will depend on the type of CD and the amount you invest. Also keep in mind that if you invest in a CD it locks up your money for the term. Cashing out early carries heavy penalties.
Personally I like the Money Market Savings Account because you can leave you money liquid, meaning you have access to your money at all times. You can get a nice APY/APR and still have the ability to transfer that interest earned right into your checking account using your online banking. I love it.
2007-09-02 09:15:17 · answer #1 · answered by thomas b 2 · 0⤊ 1⤋
Your question is confusing two items. An Individual Retirement Account allows you to set aside money and either not pay income tax on it the year it was earned (traditional IRA or 401(k)); or pay income tax on the contribution the year it was earned but not on any of the future earnings or withdrawals (Roth IRA).
A Certificate of Deposit is essentially a loan to a bank for a set time at a fixed rate of interest. You can hold a CD within an IRA account and you can also hold many other types of investments.
Typically, a CD is a place to keep a sum of money that you do not need for everyday spending, but that you do not want to tie up in a longer term, more lucrative investment such as company stock.
2007-09-06 16:00:12 · answer #2 · answered by Alan B 2 · 0⤊ 0⤋
Seeing as how you can have a CD in an IRA I don't understand your question.
A CD is a Certificate of Deposit. A CD is is a note the bank gives you telling you what they will pay you to leave your money in their bank for a certain period of time. An IRA is an INDIVIDUAL RETIREMENT ACCOUNT which is an basically an account you have designated with the IRS and other agencies as being money you intend on using for retirement. Therefore they give you special treatment and protection on that money but will penalize you if you take it out too soon(before retirement age).
The question really is, when do you need the money? If your going to need it anytime before your 60-70 years old an IRA is out of the question. If not, then an IRA is a fantasitic place to put some money so you dont have to depend on Social Insecurity when you retire.
2007-09-02 16:16:58 · answer #3 · answered by SNCK 3 · 1⤊ 2⤋
The answer depends on what you are investing for. IRA's are used for retirement so if you are saving fro retirement that is something you should look for.
CDs are a horrible investment last time I checked. If you put your money in a money market the investment is more liquid and it will make you about the same return on investment last time I checked.
2007-09-02 16:30:17 · answer #4 · answered by Cixelsyd 2 · 0⤊ 1⤋
CDs are not worth it. Everywhere I have looked, money market accounts or even savings accounts have higher interest rates, and are available for withdrawal whenever you want.
If you want to compare an IRA to a money market account, it depends on how long you want to save the money. IRAs are retirement accounts, and generally are not accessible until age 65 I believe. Traditional IRAs allow you to add money each year before taxes, and it is taxed on withdrawal in retirement. Roth IRAs are after tax deposits, so they are not taxed when you withdraw. Both have limits of how much you can deposit every year. Money market accounts and savings accounts provide interest, while IRAs can gain or lose value depending on what you invest in. Money market accounts are good for any non-retirement savings.
2007-09-02 17:53:16 · answer #5 · answered by jellybeanchick 7 · 0⤊ 2⤋
It depends on your motivation. For the long term, it is an IRA because income will accumulate tax free until you start drawing it out. (or tax free forever with a Roth IRA) If you are just saving, a CD is fine.
2007-09-02 16:09:38 · answer #6 · answered by Anonymous · 0⤊ 1⤋
In a 401 K, some amount is deducted monthly from your pay check. The money is tax deferred and so you do not pay taxes on the amount invested. Usually there are various investment choices like mutual funds, stocks, bonds etc. In some cases, the employer will match the employee’s contribution to the account, though these instances are decreasing.
2007-09-03 08:58:10 · answer #7 · answered by Anonymous · 0⤊ 1⤋
CD
2007-09-02 16:08:07 · answer #8 · answered by maggiejo717 3 · 0⤊ 1⤋