Best IRA Certificate of Deposit Rates
Many banks market IRA CDs as a product that may be appropriate to put into an individual retirement account. But the truth is that an IRA CD is really just a regular certificate of deposit.
Certificates of Deposit in Your IRA
IRAs, or individual retirement accounts, have provided a great way for Americans to save for retirement. What many people may not realize, though, is that an IRA is not an investment in and of itself, but rather it is a type of account. Within that account, you are allowed to put any number of investment vehicles, including stocks, bonds, mutual funds, and CDs.
And, although banks market CDs as being designed especially for individual retirement accounts, in reality any CD can be held in an IRA account, not just those that are designated specifically as having bank IRA CD rates.
Some banks that issue CDs may even advertise that they have IRA CD rates. Although you may find a CD marketed as having special IRA certificate of deposit rates, it is likely that you can find non-IRA CDs with the same attractive rates.
Avoiding CD IRA Misconceptions
Some investors may not understand that an IRA is a type of account and not a specific investment. Thus, they may also believe that the only way to open an individual retirement account is to open an IRA CD. However, this is not the case. An IRA account may be opened at nearly any financial institution including a bank, brokerage firm, or mutual fund company. And, it is not required that you purchase a CD to open an IRA account.
Choosing a CD for Your IRA Account
When you decide on which certificate of deposit to place in your IRA, it is a good idea to compare CDs from several different sources in order to see what will work the best for your specific financial situation and goals.
Remember that the CD interest rates will be lower than many other investment choices. However, by having a CD in your retirement account, you will be adding security to your overall portfolio through the CD deposit insurance.
Therefore, in many cases, owning a certificate of deposit in your IRA account can be a good move. Remember, though, that you can put any CD in your IRA account – not just those that are designated specifically as IRA CDs.