ANSWERS: 1
  • Economic downturns, such as the one that occurred in 2008-09, can make even the savviest investor nervous. Many people saw their IRAs lose considerable value and began looking for safer retirement investments.

    IRAs

    You can direct how and where your individual retirement account is invested. It is not automatically invested in the stock market, as some believe.

    Money-Market Investments

    One of your safest IRA investment choices is a money-market deposit account. This is similar to a regular savings account but usually earns more interest.

    FDIC Insurance

    In addition to security of your contributions, a money-market deposit account is also insured by the FDIC. You are covered up to $250,000 per account, per qualified financial institution. Other types of IRA investments (including money market mutual funds) do not have this insurance.

    Considerations

    As with all investing, you compromise the chance for growth when selecting safer investment vehicles. You must decide which is most important to you: safety of your investment, or possibility of highest return. The highest reward comes from the highest risk.

    Balanced Portfolio

    Financial planners recommend a balanced portfolio. Although you might think that investing your entire IRA into a money-market deposit account is the wisest choice, you could end up with less money at retirement than you would have if you diversified your portfolio and included stocks, bonds or other higher-yield investments.

    Source:

    MoneyRates: IRA Money Market Accounts

    Financial Options: Are IRAs Safe?

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