DC Fawcett-Why-investors-need-to-use-an-IRA-CD-(certificate-of-deposit)

DC Fawcett Real Estate – Why investors need to use an IRA CD (certificate of deposit)

IRA is an individual retirement account; it is a method of saving money for retirement apart from 401(k) scheme.DC Fawcett Real Estate This plan offers tax breaks which makes this scheme preferable among investors. DC Fawcett explains on how to utilize this scheme efficiently.

Why investors should prefer IRA?

The IRA is a diversified account of an investor as he/she can make use of this scheme to invest their bonds, mutual funds etc. It can be used as a savings account or CD. There are two types of IRA namely, traditional and Roth IRA. The main difference between both the plans is tax factor.  If you avail traditional IRA, you pay tax when you withdraw in the later stage. In case of Roth IRA, you pay the taxes first and avail withdrawals without tax at the time of maturity. The certificate of deposit offers better rate of interest than a savings account in a bank.  The term varies from 6 months to 5 years. In order to overcome the drawbacks of inflation, the investors have to diversify the portfolio by stocks and bonds.

Points to be considered while availing IRA

Choose a FDIC -insured bank

  • Not all banks are FDIC insured. Consult a financial adviser who has knowledge about FDIC and the policies. Make sure your funds are accumulated in a FDIC approved bank.


Know about the perks of withdrawing the amount before the maturity, in case an emergency arises you need to know the amount you will be handed over with.

  • Scammers offer IRA with a high rate of interest in order to bring in more investors, often the new investors fall into this trap as they aren’t much aware about the rate of interest usually offered.

Benefits of IRA CD

  • A huge sum of money is insured through FDIC  insurance
  • Investors can forecast the maturity amount and plan their retirement accordingly.
  • Establishing an IRA CD ladder is easier than portfolio diversification.
  • IRA CD ladder can save the a whole of fees paid during retirement
  • These funds are accumulated to a tax-deferred account.
  • These accounts can be started easily with or without the help of financial planner.
  • They can be used as an alternative option, for e.g. stocks.
  • Tax deductions can be availed.

Drawbacks of IRA CD

DC Fawcett complains about the issues faced by the investor when they avail an IRA CD scheme.

  • Many investors tend to diversify their portfolio with stocks and bonds in order to save money for healthcare during retirement
  • Inflation cannot be controlled easily; the money can be withdrawn by losing some percentage of money.
  • The contribution is restricted depending on the age factor.
  • Low rate of interest is offered if they start the scheme at the later stage of retirement.
  • The money is locked for a substantial time and returns are low.

From the review,  we infer that there are both drawbacks and benefits of using IRA CD.  To know more about different types of certificate of deposit, please visit DC Fawcett virtual real estate investing club where blogs are written for investors’ purpose.


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