retirement

9 common misconceptions about IRAs

Retirement » 9 common misconceptions about IRAs

Contributing is the hard part
10 of 11
Next
Contributing is the hard part © Goodluz/Shutterstock.com

Contributing is the hard part

Squirreling money safely away in a tax-advantaged account is only the first step. Putting the contribution into an investment is the next step. Often, contributions to a brokerage IRA will go into a money market sweep account earning minimal interest.

"Maybe they're not ready to make that investing decision when they made the contribution decision," says Maria Bruno, senior investment analyst with Vanguard's Investment Strategy Group.

If the money isn't invested fairly soon, investors may lose out on opportunities to let the money grow at a significant rate. The longer they wait, the greater the opportunity cost can be.

Bruno suggests that investors borrow a technique from 401(k) plans and choose a mutual fund to act as a default investment while they decide how they would like to allocate the money over the long term.

"Instead of parking it in a money market, perhaps it would be better to park it in a balanced fund because you get that benefit of being invested in the market right up front," she says.

Keeping your investment horizon and objectives in mind, put your money to work as soon as possible to avoid losing time.

Previous
10 of 11
Next

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
9 myths about IRAs
MORTGAGE REFINANCE AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 3.73%  0.02 3.75%
15 year fixed 2.93%  0.02 2.95%
5/1 ARM 3.02%  0.01 3.03%
 
View Rates in your area Next
Product Rate Change Last week
30 year fixed refi 3.80%  0.02 3.82%
15 year fixed refi 3.01%  0.02 3.03%
10 year fixed refi 3.06%  0.06 3.12%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.68% --0.00 2.68%
48 month used car loan 2.76% --0.00 2.76%
60 month new car loan 3.07%  0.02 3.09%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 1.01%  0.00 1.01%
2 Year CD 1.19% --0.01 1.20%
5 Year CD 1.67%  0.04 1.71%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.88% --0.00 15.88%
Cash Back Cards 16.33% --0.00 16.33%
Low Interest Cards 11.10% --0.00 11.10%
 
Next
advertisement
Partner Center
advertisement

Connect with us