Common Misconception: A Roth IRA Offers Rates on Investment

Many investors try to find the best Roth IRA rates in the marketplace. If you are one of those investors, you are going to be greatly disappointed. Here are a few things to consider about one of the most common misconceptions about Roth IRAs.

Roth IRA Rates

Many people mistakenly believe that you can get a rate of return from a Roth IRA. They shop around online and try to find the best rates out there. However, this is not some type of investment that you can get a rate of return on, as you can on a CD. 

What Is a Roth IRA?

Since you now understand that you cannot get rates of return from a Roth IRA, it is important that you understand how they work. A Roth IRA is a type of investment account with which you can purchase other securities. You are going to be able to fund the account and use that money to invest in stocks, mutual funds, bonds and other types of investments. The major advantage of this account is that you can fund it with after-tax money, and then you will not have to pay taxes on the money that you earn from the investments in the future.