Many IRA account holders who want to increase their retirement funds in a risk free way look into certificate of deposits. Certificate of deposits are one of the best investments for conservative investors. CDs are considered as money in the bank and there is no way that you will lose your investments as long as you wait for the maturity date. Most CDs are insured by FDIC and CDIC so no matter what happens to the financial institution, you can still get your money back. But despite the fact that CDs are safe, you must still be careful in choosing your CD investments. Here are some of the things that you need to consider in choosing your CDs.
The first thing that you need to consider in choosing your CDs is the rate. The IRA CD rates usually depend on the amount that you deposit and the maturity date. The bigger your deposit the higher your CD rate is. If you want to get the best IRA rates, you should consider investing in jumbo CDs. Jumbo CDs usually have the highest interest rates but you should also have to make a large deposit. Usually large companies invest in jumbo CD to make their funds grow without the risk of losing their money. Jumbo CDs usually require a $1 million deposit or more. However, some financial institutions require lower deposits.
Aside from IRA CD rates, you should also ay particular attention to the term of your CDs. Take note that once you have deposited your money, you have to wait for the term to expire before you cash out your funds. If you take out your funds before the term expires, you will be charged with hefty penalties and other fees that may apply. To avoid early withdrawals, it is important to tuck away enough money in the bank for emergency purposes.
Lastly, you should make sure that the financial institution where you plan to purchase your CDs is insured. Some financial institutions are not insured and even though they provide higher IRA CD rates, it is not worth the risk. The best IRA rates do not only offer high returns but are also safe.
- Fee Based Investing Versus Traditional Investing (2009taxes.org)
- Tax Carnival Ecstasy – November 8, 2011 (2010tax.org)
How to Choose Your IRA CD Investment