Ira?

[sublime99]

just a few questions,
How safe are IRA's?
Is it possible to have two IRA accounts?
Possible to withdraw or borrow money early from the account?
What is the basic/average interest rate as of today? the (Expected Return Rate)in %... ?

[kork13]

IRA's are not actually an investment in and of itself. An IRA is a type of investment account (IRA = Individual Retirement Account). It might make better sense if you think of it being similar to a 401k or a brokerage account, where it's basically a shell to hold other investments for you. The benefit of an IRA is that the 'shell' offers tax advantages, whether tax-free withdrawals in retirement (Roth IRA) or tax-deferred contributions today (Traditional IRA).

An IRA can hold safe investments (cash/money markets, CD's, bonds), or more risky investments (stocks, REITs, commodities, etc.). Technically, you can even get physical assets (such as real estate) into an IRA, though I believe that's a fairly complex process. So bottom line, an IRA can be as safe or risky as you want it to be, based on the investments you place into it. Likewise, the investment returns you get from an IRA will depend on the investments you hold within it.

You CAN hold multiple IRA accounts, but it's normally not worth the trouble. For example, you could have both a Roth IRA and a Traditional IRA. Or, you could have 2 Roth IRA's at two separate investment companies. However, you can only contribute a sum total of up to $5,000/year (unless you're a 50+ y/o, then it's $6,000) REGARDLESS of how many IRA's you may have, so it's normally simplest to just use one.

You technically CAN withdraw money from IRA's early (before age 59.5), but pretty much anyone with your best interests in mind will strongly recommend against it. The "best" case here are Roth IRA's. Because those contributions have already been taxed, you can withdraw your contributions at any time. However, if you withdraw any of your gains or interest, you will have to pay taxes on them PLUS a 10% early withdrawal penalty. But even withdrawing your contributions is a bad idea -- the money's there for retirement, so keep it there. Because the contribution limits are so low, it's a waste to add money to your Roth only to withdraw it at a later time (pre-retirement). For all other IRA's, if you withdraw from them early, you'll pay taxes and the 10% penalty on all withdrawals. To my knowledge, there is no option to borrow from an IRA.

[disneysteve]

I agree with everything kork said but let me elaborate on one thing. Many people have multiple IRA accounts. I do. So does my wife. The reason is that they weren't all started at the same time or under the same conditions. When I was younger and eligible for the tax deduction, I had a traditional IRA. Once my income passed the point of deducting the contributions, I stopped adding to the traditional (but still hold that account) and opened a Roth. Then I had a pension plan from an old job that I rolled over into a rollover IRA, so that gave me a 3rd IRA. My wife also has a traditional, a Roth and a rollover. So between us, we now have 6 IRAs.

[MonkeyMama]

I personally don't like having all my eggs in ONE basket. Certainly some brokerages have failed in recent years. So, we actually have 4-5 IRAs between us. Will probably narrow down to 3 or 4 for the long run. But I would never keep all of my money at one financial institution.

You can invest in FDIC-insured cash - IRAs can certainly be pretty safe. Just depends what you invest in.

[disneysteve]

I personally don't like having all my eggs in ONE basket. Certainly some brokerages have failed in recent years.
But I would never keep all of my money at one financial institution.

Is that a reasonable concern, though? Did any investors actually lose money when a brokerage closed up? You might have lost money on a specific investment, like Lehman bonds, but if you had a brokerage account and owned stock in various companies, even after the brokerage closed up, you still owned the stock.

[jpg7n16]

just a few questions,
How safe are IRA's?

Let me answer with a question:

Question: Is a cup from Starbucks hot?
Answer: That depends a great deal on what's inside that cup.

IRAs are just accounts that hold investments. In other words... the IRA is the cup, the investments are the drink inside the cup.

Is it possible to have two IRA accounts?

Yes.

You can have as many as you want, but keep in mind that you're limited to contributing $5,000 TOTAL across all of them.

Possible to withdraw or borrow money early from the account?

Withdraw: Possible, but highly discouraged. Why pay an unnecessary 10% penalty to withdraw your own money?

It's an Individual Retirement Account, if the money's not for retirement, don't put it in the account.

Borrow: Not really. There is no loan feature on an IRA. There is however what's called a 60 day rollover, so you can kinda borrow against it, but only for 60 days.

Rollovers - Individual Retirement Arrangements (IRAs)

What is the basic/average interest rate as of today? the (Expected Return Rate)in %... ?

Question: What is the average temperature of a Starbucks cup?
Answer: That depends a great deal on what's inside the cup.

The account doesn't have an expected rate of return, it's just a cup. The investment you are considering in that account will have an expected rate of return.