Thursday, February 18, 2016
Knock knock: IRA certificates open an extra door for retirement savings
When it comes to building that nest egg, savers have several tools at their disposal.
A sometimes-overlooked retirement investment strategy is utilizing a Term Share Certificate Individual Retirement Account, the credit union’s version of the Certificate of Deposit.
At Dupaco, members can choose a certificate term, from 18 to 60 months, and earn a fixed rate of return during that time. Interest adds into the account every six months, so members also earn interest on that additional amount, reaping the benefits of compounding interest.
“It can be a good investment option for someone close to retirement or anyone who has a low risk tolerance,” says Lynn Schmitt, Lead IRA Specialist at Dupaco. “Generally, though, the market will yield a larger rate of return over time, so it’s important for members to speak with one of Dupaco’s financial advisors to ensure they are investing their retirement funds in the most appropriate way.”
Is a Term Share IRA Certificate a Good Fit for Me?
Schmitt says retirement savers might consider adding IRA certificates to their portfolio when they:
Things to Consider Before Using IRA Certificates
Before utilizing IRA certificates, it’s important to understand how they work:
“At one point or another, IRA CDs will come into play for most people saving for retirement,” Schmitt says. “As rates increase over the next several years, I would expect a shift of retirement funds being moved back into IRA CDs.”
By Emily Kittle