Which is better a CD or IRA?

Question

Which would be better for a single mom. I have about 7,000 to put away. Is a CD or IRA better for me?

Answer 1

Well, you have some very good answers above.  If you don't need the money until after you retire, go for an IRA.  Remember, you can hold the money in a CD, with in an IRA.  Remember, IRA has a contribution limit of $5,000 (more if you are over 50 years old)./

Answer 2

To add to the other answer,  the IRA grows tax free until you take it out.  This really adds up over the years.  There is a limit to how much money you can put in an IRA.  Again, it is not to be touched until you are 59 and a half.  If you could put $1000.00 in to an IRA,  you will not regret it.

Answer 3

If you have earned income and dont already have an IRA thats the best option because the earnings grow tax-free or tax-deferred depending on which type of IRA.  Depending on your age you can put $5,000-6,000 into it. each year.  Put the remainder in a CD.

Answer 4

it all depends on what you want to do with it... a CD is a short term investment of 3 months to 2 years depending on the bank... do you want to be able to get to the money before that? you will get penalties if you take it out before that... (boring and barely outrun inflation)

An IRA is a individual retirement account.. which means that you cant touch it until you are 59 1/2.. if you take it out before that, then you will get penalties.. i have IRAs and beleive in them strongly but you dont want it if you need the money between now and retirement..

If you are wanting to make some good interest and willing to wait up to 5 years to touch the money then you should put it in a mutual fund...