Have A Cd In My Roth Ira?

[Goldy1]

I am early 30's. I have a a roth ira. I have never taken any money out of it. It is comforting to know I can tak eout contributions if I ever need to but it is unlikely, however, no timpossibly I will need to in the next 3 to 4 years.

I have the money in the roth invested in a lifelystyle retirement date fund. I got a little freaked out with the market volatility and changed from a freedom 2035 fund to a freedom 2020 fund to have less tocks, more bonds.

I bought a 1,000 dollar 3 month cd in my roth at a 1.85 rate. I was thinking that taking money from my bank account which always includes a cd which I end up paying taxes on from the intererest to holding a cd in a roth ira might be a good idea.
The interest to the cd in the roth will grow tax deferred an dI won't owe income taxes on it.

Any thoughts? I was surprised the cd rates at fidelity this week were quite a bit below national average!

[disneysteve]

I'm not sure what you are asking here. Are you asking if you should hold a CD in your Roth? You certainly can, though I wouldn't recommend it for someone in their 30s. You need to be more aggressive than that to build a sufficient nest egg over the next 30+ years. And I certainly wouldn't buy a CD paying only 1.85%. One year CDs are around 4% right now, more than double what you are earning.

As for switching the date of your lifestyle fund, that probably isn't the best idea either. It kind of defeats the purpose of those target date funds.

[MoneyTrev]

If you want to, you can.

Take more risk though because it's the recession right now and if you buy stocks and hold them long term, you can probably get better results.

[maat55]

I agree with Steve, you are too conservative on your target fund and low in your CD interest. I have a savings account paying 3.75%.

Good investors buy low, average investors sit on the sidelines. Your 30, get some nads.

[Goldy1]

yes, you are probably right considering my emergency fund is very loaded in ING savings and cd's but our jobs are very related to auto industry here.

Anyway, I was surprised the cd rates were so low at fidelity last week compared to what banrate.com said was average.

I guess I figured since I always hold cd's in my bank account and pay taxes on the earnings, why not hold one in my roth and get some tax deferral.

I plan to work at least part time until I drop if not by neccesity but my choice since I Enjoy a job.

I was a bit insecure about picking my own portfolio even tho I have chosen allocation based on those finance for dumies type books in the past so the lifestyle fund seemed good. I guess I picked 2020 so I could be less volatile, but I know it's for the long run logically. I just get worried about the market going into unchartered territory and not getting good returns over even the next 30 years averaged out. I have been investing since about 2000 and have seen literally no positive returns if you look at my portfolio today.

[bjl584]

You can do that, but you may be better served finding a few good stocks that have nice dividends and investing in those within your Roth. It will all be tax free.