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Which is better roth IRA or IRA CD?

Updated: 9/15/2023
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14y ago

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I think you misunderstand what an IRA is.

There are two types of IRAs. One is a Roth IRA, and the other is just an IRA. The second one is often called a Traditional IRA (TIRA) to make it clear you are not talking about a Roth IRA.

Either type of IRA is a retirement account. You can open either at a bank, brokerage house, mutual fund company, or insurance company.

You can open either type of IRA at a bank. One of your investment choices at the bank will be a Certificate of Deposit (CD). A CD is a type of savings account that pays higher interest because you promise to leave your money in it for a long time.

If you want to invest your retirement money in a CD, you can go to a bank and tell them you want to open a Roth IRA account or a TIRA account. Then you tell them that you want to invest the money in a CD. And then they will put a CD into either your Roth IRA or TIRA account. You can refer to a CD that is in a Roth or TIRA account as an "IRA CD" if you wish.

So you don't have to choose between a Roth IRA or an IRA CD. You can have a CD in your Roth IRA if that is what you really want.

Of course, you can open either type of IRA account at a brokerage house. There you can invest in stocks, mutual funds, bonds, etc in either type of account if that is what you wish. Or you can open either type of IRA account at an insurance company where you can invest in an annuity.

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Q: Which is better roth IRA or IRA CD?
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