How much interest does the average ira earn?

Roth IRAs typically have average annual returns of 7-10%. In a nutshell, Roth IRAs don't pay an interest rate. A Roth IRA is similar to a shopping cart, it's basically an empty basket until you fill it. But with a Roth, you're filling that basket with investments, not cheerleaders.

In this way, Roth IRAs are the inverse of traditional tax-deferred IRAs or 401 (k) s; with those accounts, you'll have to pay taxes when you withdraw the funds. The idea that a Roth IRA is just a medium for your investments doesn't mean that all Roth IRAs are the same. The Roth IRA's five-year rule states that you cannot withdraw tax-free earnings until at least five years after you first contributed to a Roth IRA.

Rochelle Paker
Rochelle Paker

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

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