How Much Interest Does the Average IRA Earn?

Roth IRAs are a great way to save for retirement, as they offer average annual returns of 7-10%. Unlike traditional tax-deferred IRAs or 401(k)s, Roth IRAs don't pay an interest rate. Instead, they act as a shopping cart for investments, allowing you to fill it with whatever investments you choose. However, there are some restrictions on Roth IRAs.

The five-year rule states that you cannot withdraw tax-free earnings until at least five years after you first contributed to a Roth IRA. This means that you must be patient and wait for your investments to mature before you can reap the rewards of your savings. Overall, Roth IRAs are a great way to save for retirement and can provide a steady stream of income in the future. However, it is important to remember that the returns are not guaranteed and that you must be patient in order to reap the rewards of your savings.

Rochelle Paker
Rochelle Paker

Personal finance specialist. Areas of expertise Banking, business, real estate, consumer credit, retirement accounts.

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