Understanding the Difference Between IRAs
Individual retirement accounts, commonly known as IRAs, are worth considering if you’re thinking about how to save for your retirement. In fact, IRAs are one of the most powerful retirement savings tools, and investors can choose from several different varieties.
Both traditional and Roth IRAs allow you to make annual contributions of up to $6,000 in 2020 — or $7,000 if you will be age 50 or older at any time during the calendar year.
The first step to opening an IRA is to identify the type of IRA that is best for you. From traditional and Roth to inherited IRAs, there are a number of options that are available. Once you’ve made the decision to start contributing to an IRA, the next step may be to choose between a Credit Union IRA or an Investment IRA. Your dedication to regular contributions, coupled with a reasonable rate of return, may help increase the longevity of your income during retirement.
An IRA held at the credit union features NCUA-insured IRA Savings and IRA Certificate accounts. Compared to investments in the stock market, these are lower-risk accounts that typically provide stability and modest yearly returns. Dependent upon your retirement goals, your financial health and life stage, Credit Union IRAs may be a good fit.
The alternative would be an Investment IRA, which consists of a variety of financial options, including stocks, mutual funds, bonds, annuities and other investment products. By considering an appropriate amount to invest in a diversified portfolio, these products give your IRA the potential to grow. Yes, stock prices can have bigger price swings than cash alternatives such as IRA Savings or IRA Certificates; however, stocks historically have provided higher long-term returns than cash alternatives.1
So, which IRA is best for you? Sometimes the choice is easy. Often times, it’s important to consult a qualified financial professional to help you decide on the right type of IRA.
1Past results are not necessarily indicative of future gains.
RBFCU Investments Group LLC is a wholly-owned subsidiary of RBFCU Services LLC. RBFCU Services LLC is affiliated with Randolph-Brooks Federal Credit Union (RBFCU). Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. FR-3144585.1-0620-0722