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IRA Investment Options

Your IRA is a special, tax-exempt investment account. Like your investment account at a brokerage house, it can contain a wide variety of types of investments. Here are some of the most popular types of investments.

Certificates of Deposit (CD's): A time deposit giving the bank the right to hold your money for a fixed period of time. In return, the bank gives you a higher rate of interest than you would normally get in a savings or money market account, where you may withdraw your money at any time. With a CD, there are generally stiff penalties for early withdrawal.

Stocks: Partial ownership in a corporation through the purchase of shares of that corporation. Stocks are bought and sold "over the counter" or through a broker. Brokers trade stocks in the stock market.

Bonds: Essentially a loan to a corporation or government entity which pays you interest.

Mutual Funds: An investment program by which you pool your money with that of other investors to form a "fund" which then invests in stocks from many corporations or a group of bonds. They are exceedingly popular because they allow you to diversify your investment. They are professionally managed, liquid, and convenient for most investors.

Money Market FundsThis is a mutual fund that invests in U.S Treasury Bills and Notes, large certificates of deposit, commercial paper and bankers' acceptances. Its goal is to protect your capital while showing a modest return. It will always return more than regular savings accounts, but usually less than the current CD rates. Money markets are very liquid and good places to "hold" your money while considering where else to put it.



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