Where Should I Put My IRA Money Now?
An IRA is an investment vehicle that allows you to save tax-deferred and potentially enjoy tax-free withdrawals in retirement. When selecting an IRA provider, be sure they offer low fees, diverse investment choices, and excellent customer service.
An appropriate asset mix for an IRA should reflect your risk tolerance, investment time horizon and financial circumstances. Young investors may favor tilting more heavily toward stocks while older investors might favor shifting more to bonds.
Bank IRAs
IRAs can be an effective way of saving for retirement, with tax advantages, potentially higher returns, and multiple investment options. They are particularly appealing for the 67 percent of workers with access to workplace-based plans or those looking to supplement them with additional money.
Usually, an IRA can be opened at any bank, mutual fund company, or brokerage firm. Most provide access to CDs, stocks and bonds as investments. You could also opt for an automated investing solution like SoFi Automated Investing which offers free management along with access to financial planners and career counselors; or take a different route by exploring Fundrise which allows investors to place their IRAs in real estate investment trusts.
Target-date funds
Target-date funds are an increasingly popular retirement investment strategy. They’re tailored toward an investor’s desired retirement year and automatically rebalance to more conservative assets as that date approaches, making them widely accessible via 401(k)s and individual retirement accounts (IRAs).
Investors should take time and care when selecting their fund. It is especially essential that investors monitor holdings over time, ensuring there is not an outsized focus on large-cap stocks which could impede overall return. A financial advisor can be invaluable when choosing target-date funds.
Money market funds
Money market funds are a type of mutual fund that invests in short-term debt securities like commercial paper and Treasury bills, offering safe and stable investments for your IRA funds.
Money markets offered negligible yields during low interest rate environments; however, as interest rates have increased seven-day yields have increased dramatically and have enabled savers to better balance out inflation with their savings in money market funds.
Use an IRA to boost your retirement savings over the long-term, while investing in stocks may come with higher risks and reduced returns.
Stocks
Equities (stocks), also referred to as equities, play an integral role in driving long-term portfolio growth. Common stocks represent shares in an individual company’s ownership structure and fluctuate depending on its performance.
Investment in low-cost stocks, mutual funds and ETFs is essential to growing your retirement savings over time. When selecting your broker or robo-advisor make sure their fees won’t eat into your investment returns and can impede its potential.
Bonds
Investors looking for greater stability should diversify their IRA portfolio with both stocks and bonds, which offer different levels of growth potential and risk. Stocks tend to gain ground faster, but their risk can be higher. Bonds tend to deliver lower returns but provide safer returns with predictable outcomes.
Investment diversification is essential to maximizing retirement income potential, and Betterment makes this easy through mutual funds and exchange-traded funds (ETFs). They offer Roth, traditional, inherited, rollover IRAs – with no minimum account minimum required and access to low cost investments like Roth ETFs.
ETFs
IRAs provide tax-deferred growth with access to a broad selection of investments, but can come with potential downsides as some IRAs charge high fees that reduce investment returns. To minimise these costs, select an IRA with low fees and competitive commission rates.
Firstrade offers commission-free stock, ETF and option trades as well as an array of no-transaction-fee mutual funds; its team of customer service agents provides friendly assistance while its platforms enable active traders.
Betterment or Wealthfront offer professional portfolio management through their robo-advisors. However, they charge an annual management fee and may require a minimum initial investment.
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