Any advice IRAs and Savings FDIC Insured

[Mainstreet]

I'm not in position to trust the stock market as a long term strategy. Is there anywhere to park savings such as an IRA or savings where it can return something beyond what the banks are paying which is less than miniscule. I was looking at options like American Express but I do not have a clue on how these work compared to a physical bank. I guess doing business over the internet is worrisome.

 

[Folster]

Unless you have 3 to 6 months of emergency savings and credit cards paid off, I wouldn't contribute new dollars to an IRA.

Remember, an IRA is tax deferred. You can contribute 5500 annually and an extra 1000 after you turn 50. Deductibility depends on income and whether you have a workplace plan. You can make withdrawals at the age of 59.5 without penalty and they are taxed as ordinary income. Early withdrawals are penalized an additional 10%.

Roth IRA's grow tax free. Dollars contributed are already taxed. Eligibility depends on your income and if eligible you can contribute the same 5500 with the additional 1000 at 50 like the traditional IRA. You can access your principal at anytime without penalty, but gains will be penalized if you withdraw them prior to 59.5.

As far as FDIC insured, I doubt you can find anything over 1%. I think Ally bank was at .9% last I checked.

 

[Mainstreet]

Unless you have 3 to 6 months of emergency savings and credit cards paid off, I wouldn't contribute new dollars to an IRA.

Remember, an IRA is tax deferred. You can contribute 5500 annually and an extra 1000 after you turn 50. Deductibility depends on income and whether you have a workplace plan. You can make withdrawals at the age of 59.5 without penalty and they are taxed as ordinary income. Early withdrawals are penalized an additional 10%.

Roth IRA's grow tax free. Dollars contributed are already taxed. Eligibility depends on your income and if eligible you can contribute the same 5500 with the additional 1000 at 50 like the traditional IRA. You can access your principal at anytime without penalty, but gains will be penalized if you withdraw them prior to 59.5.

As far as FDIC insured, I doubt you can find anything over 1%. I think Ally bank was at .9% last I checked.

I do not plan to contribute new funds to an IRA except trying to get a better interest rate than what the large banks are offering, which is close to nothing. The interest rates for CDs are just as bad. I guess I'm a bit hesitant to go with an internet bank although I believe they are FDIC insured.

If you have any experience using Ally bank or even American Express for savings I would be interested in your (or the experience of anyone) as their interest rates approach the .9% you mention. I must say I have gotten used to using the larger banks that have locations just about everywhere.

I want to thank you for your response. I really appreciate it.

 

[Folster]

I've used ING Direct (before it was bought by Capital 1) and Emigrant Direct in the past. Both allowed for easy linking to your regular checking account. You could transfer funds between account fairly easily. The only thing is it takes a couple days for the transfers to go through, something that could be a problem depending on your liquidity needs. I remember when I used to get 5% interest from those accounts. Man that was nice. I've since moved our emergency funds to a brokerage account where I have them invested in an ultra short term bond etf. The yield is over 1% and it has minimal risk, but it is not FDIC insured and can lose principal.

I've never used Ally, but I would have no problems doing so.

 

[Russ Smith]

Unless you have 3 to 6 months of emergency savings and credit cards paid off, I wouldn't contribute new dollars to an IRA.

Remember, an IRA is tax deferred. You can contribute 5500 annually and an extra 1000 after you turn 50. Deductibility depends on income and whether you have a workplace plan. You can make withdrawals at the age of 59.5 without penalty and they are taxed as ordinary income. Early withdrawals are penalized an additional 10%.

Roth IRA's grow tax free. Dollars contributed are already taxed. Eligibility depends on your income and if eligible you can contribute the same 5500 with the additional 1000 at 50 like the traditional IRA. You can access your principal at anytime without penalty, but gains will be penalized if you withdraw them prior to 59.5.

As far as FDIC insured, I doubt you can find anything over 1%. I think Ally bank was at .9% last I checked.

Yep even longer term plans right now are paying really low interest.

On early IRA withdrawals also remember there's often a state penalty too, in California it's 2.5%. So you lose 12.5 plus whatever your income tax rate would be.

 

[Mainstreet]

I've used ING Direct (before it was bought by Capital 1) and Emigrant Direct in the past. Both allowed for easy linking to your regular checking account. You could transfer funds between account fairly easily. The only thing is it takes a couple days for the transfers to go through, something that could be a problem depending on your liquidity needs. I remember when I used to get 5% interest from those accounts. Man that was nice. I've since moved our emergency funds to a brokerage account where I have them invested in an ultra short term bond etf. The yield is over 1% and it has minimal risk, but it is not FDIC insured and can lose principal.

I've never used Ally, but I would have no problems doing so.

I think I will check out the ultra short term bond etf or perhaps Ally. Thanks again for the information provided by you and Russ.