You might be wondering, what exactly is an IRA and how does it work? An individual retirement account (IRA) is a retirement savings account that allows a person to deposit money toward their retirement. This type of account is managed by the individual planning for their own retirement, as opposed to a retirement account managed by an employer such as a 401(k).
Additionally, there are generally three types of IRAs. These include traditional IRAs, Roth IRAs and rollover IRAs.
Why might my IRA account be losing money?
- A decline in the market — IRA accounts invest the money you put into them into stocks, bonds, mutual funds and/or exchange-traded funds (ETFs). When the market faces a decline, this can be reflected in the money in your IRA account.
- Early withdrawals — Each of the IRA accounts have penalties for those who choose to make withdrawals from their accounts before 59 1/2 or if they withdraw earnings before that age. Roth IRAs have special rules that allow you to withdraw contributions both tax- and penalty-free, regardless of your age.
- Non-diversified investments — Your IRA account could be losing money if you haven’t properly diversified your investments over time. Diversification is important because it helps minimize the effects of a particular segment of the market’s decline.
What can I do to stop losing money from my IRA account?
- Stop making early withdrawals if possible.
- Diversify your investment portfolio.
- Let the contributions build compound interest.
- Hire a CERTIFIED FINANCIAL PLANNER™ professional.
Why should you hire a CFP® professional?
Hiring a CERTIFIED FINANCIAL PLANNER™ professional is a great way to take control of your retirement and financial planning. They can be a helpful resource to help you account for the ups and downs of the market and meet your retirement goals.
Talk to a ProVise CFP® professional about why your IRA is losing money
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance, and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about why your IRA is losing money? Contact ProVise today to schedule a complimentary consultation.