CDs almost always have minimum deposit amounts, but they range widely. There are some with minimum deposits as low as $500 and then there are the “jumbo” CDs that require deposits upwards of $100,000.

They also range widely in terms of length; some can be as short as one month and some go up to 5 years.

Rates and returns will vary depending on these two factors, so use calculators to figure out which is best for you.

I do have a question, though: With CDs is there a minimum deposit amount?

Thanks again. This info will come in handy once college is behind me and the working world is upon me.

IRAs are complex instruments but i will try to simplify them here.

An Individual Retirement Account (IRA) is a private retirement savings plan under US tax code. A person can make contributions to that account throughout their career, direct the custodian of the account (i.e. a bank or mutual fund) to invest your money as you choose (i.e. stocks, bonds, CDs, etc.), and then you can withdraw the funds once you turn 59 1/2 (don’t ask me why it’s that age).

Similar to a 401(k), the principal advantage of an IRA is its realized tax benefits, and the difference between a Traditional IRA and a Roth IRA is how these benefits are realized.

In a Traditional IRA, your contributions are tax-deductible, meaning, for example, you could contribute $3000 one year and thus reduce your tax liability by $3000 for that year. When you retire, though, the money you withdrawal from your IRA will be taxed as income at that time. This will save you money primarily in the short-term. It could also save you money in the long-term if you think you expect to be in a lower tax bracket when you retire than you are when you contribute.

A Roth IRA is kind of the opposite. Your contributions are taxed in the present, when you make them, but at retirement you can withdraw the money tax-free. This is a good option if your IRA earns a lot of money and if you expect to be in a higher tax bracket when you retire.

In both cases, you do not pay taxes on earnings within the account (i.e. additional money made through investments). However, recall that in a Traditional IRA you will pay taxes on the money you withdraw during retirement.

These are great options for retirement savings because you can put your money to work for you while potentially saving on taxes. But this is strictly for retirement savings and you cannot access this money until you are old, grey and ready to sit on the beach all day.

Where does the IRA and the Roth IRA fit in with the other modes of saving?