What's the difference between an individual retirement account (IRA) and a certificate of deposit (CD)?

IRAs
Answers
Sort By:
Most Helpful
3 weeks ago
100% of people found this answer helpful

An Individual Retirement Account or IRA is a type of tax deferred retirement account. It is a receptacle for holding assets from stocks, bonds, mutual funds, and even a CD if you wanted.  A Certificate of Deposit or CD is a "time deposit" by a bank or credit unions and normally has FDIC insurance. So, one is a type of account and the other is a type of investment with various maturity dates depending on which you chose. They are generally 6 month, 1 year, 2 year, and up to 5 years, but can go longer. It is not what I would recommend in this low interest rate environment unless you are putting a small portion of your portfolio into CDs as your "safe money."

Hope this helps, Dan Stewart CFA®

July 2014
3 weeks ago
3 weeks ago
3 weeks ago