Traditional IRAs do offer interest, but the rate can vary significantly. There are a few factors that will influence how your money grows in a Roth IRA, such as the diversification of your portfolio, your retirement timeline, and the amount of risk you are willing to take. Generally, Roth IRAs have provided an average annual return of between 7% and 10%. Unlike a savings account that pays an interest rate, an IRA does not pay an interest rate.
An IRA can be compared to an empty basket that must be filled with investment products such as stocks, bonds, ETFs, certificates of deposit, etc. Therefore, the money you contribute must be invested in these high-growth opportunities for a return, which in turn generates more money through capitalization. You may be wondering what the average return rate for a Roth IRA is. However, this retirement account can generate income in a number of ways, depending on your investment options, so there is no average Roth IRA return.
Your return with your own IRA could be significant or minimal, or you could even suffer losses.
