If the thought of buying more low priced index funds or actively managed mutual funds leaves a bitter taste in your mouth after the stock market crash of 2008, did you know that Vanguard allows you to buy Certificates of Deposits (CDs) in your Vanguard IRA?

Most people I know are very displeased with their Traditional IRA / Roth IRA performance.  Most of us have seen any gains built up over the last 10 years completely wiped out, and now, justifiably, we’re all wondering — What do I do now?

If you’re one of those gittery, nervous investors who hates risk, buying a few CDs for your Vanguard retirement account might be for you.  You can either buy them online through your Vanguard account, but because Vanguard has such excellent customer service, I generally prefer to give them a call and talk to a live person.  Call me old fashioned, but I like talking to a person when it comes to my retirement accounts.

Who could benefit from buying CDs in their IRA?

1. Older individuals who want to protect their money.
2. Market mavens who think the market will enter a prolonged downturn.
3. Individuals who are unsure what to buy, but want to make smaller returns while waiting for direction.
4. Individuals who have acquired significant wealth, and can survive on low interest cash payouts.

I’m sure there are a few more esoteric examples, but these are among the few scenarios I can justify using such a low risk, low interest paying investment in a retirement account.

Just to give you a moment of pause before buying these CDs for your IRA, tax deferred accounts like an IRA or 401k were conceived to invest in equities to build long term wealth.  This most certainly won’t happen getting a low 3-5% return on investment using CDs.

Remember, investing choices are highly dependent on your age, which determines your risk tolerances, so if you decide to get a CD in your IRA, please consider getting financial advice from an expert if you’re not an experienced investor.

If you have further suggestions why this is a stellar idea, or perhaps the dumbest idea ever, please consider sharing them below.

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