Interested to invest in an Individual Retirement Account (IRA) and looking out for the best IRA rates? This article will make you familiar with the current IRA rates offered by different banks and other financial institutions in the U.S.
Retirement is a phase of life that calls for meticulous planning. It is always a good idea to invest in something that provides financial security post retirement. There are a number of options when it comes to investment plans for retirement. While some of these investment vehicles are relatively safer, others involve some amount of risk, but fetch huge returns. An individual retirement account or IRA requires you to set aside a certain sum of money from your monthly paycheck for a defined period of time, and you get a fixed rate of interest on the sum you invest. On investing in an IRA account, you get a certificate of deposit (CD) called an IRA CD. With this IRA CD, you can invest the money deposited in your IRA account, in stocks and bonds.
Investing in an IRA is considered to be extremely safe and this is one of the reasons why it is highly popular. There are two basic types of IRAs: traditional IRAs and Roth IRAs. While a traditional IRA is tax-free during the investment period and is taxable at the time of withdrawal, a Roth IRA involves deduction of taxes from each premium and a tax-free withdrawal. Let us learn more about how to choose your IRA and the best IRA rates available.
How to Choose Your IRA
One of the major benefits of investing in a traditional IRA is tax exemption on the deposited amount. This is the reason why you can deposit only a limited amount annually in your IRA. This amount is arrived at, and updated annually, by the Internal Revenue Services (IRS). Since the risk factor is next to nothing, the rate of return is also low, as in the case of other investments that involve little or no risk factor. In such a scenario, it is important to choose an IRA that gives you the highest interest rate determined in terms of annual percentage yield (APY). The higher the APY, the better are the benefits you get out of your IRA.
So, before choosing the company you decide to invest with, it is important to consider a few factors.
- Choose a company that has a history of good investments.
- Create your account with a company that does not cite an exorbitant minimum amount.
- Make sure that your account is easily accessible and allows you to invest in all possible investment vehicles, as and when you want to.
Best IRA Rates in the U.S.
Since, by now you already know that investing in an IRA CD is a safe way to ensure financial returns and benefits after retirement, let us have a look at some of the banks, insurance firms and other financial institutions that offer investment in IRAs. Just have a look at the table below to know who has the best IRA CD rates. The data in this IRA CD rates comparison table is for the month of March, 2011. The annual percentage yield offered by different banks, in the given table, are for a twelve month IRA. The longer the duration of your IRA, the better rates you get.
|Sr No||Bank||Annual Percentage Yield (APY) (in %)||Minimum Amount Required to Open Account (in dollars)|
|1.||Transportation Alliance Bank||1.26||1000|
|9.||ING Direct||0.75||No minimum amount required|
|10.||Bank of America||0.45||3000|
It is important to note that these rates are subject to change and it is advisable to ask about the current rates from the respective banks before investing. Also some banks offer better rates to their customers online.
Apart from IRAs, you can invest in other areas such as stocks, mutual funds, equities, shares, etc. Even investing in properties and real estate is a good option if you want greater returns to add to your retirement savings. An IRA certificate of deposit is insured by the Federal Deposit Insurance Corporation (FDIC), which means that if the company that has issued you the IRA CD, goes bankrupt, you’ll receive compensation up to an amount of $100,000. So, if it’s risk-free investment you are looking for, IRAs are the way to go!