AsymF <fearful.asymmetry@[EMAIL PROTECTED]
> writes:
> I was considering opening a SEP-IRA with our local SECU, but they show
> an APY of 3.50%. Most figures I hear about are in the neighborhood of
> 10-12% APY. Why would the SECU be so comparatively low on their APY?
A SEP-IRA is an account type, not a specific security.
You can open a SEP-IRA and inside that account, you may have
anything from a money market fund or a CD to shares of the most
speculative stock you can find. (what's available in a
particular SEP-IRA account depends on where you opened it)
Presuming that by "SECU" you mean a local credit union,
it's likely that the security in question that you're
considering for your SEP-IRA account to hold is a
CD - a certificate of deposit. CDs pay yields that
are generally comparable to high-quality bonds. Take
a look at <http://bankrate.com/brm/rate/deposits_home.asp>
for some comparisons.
> Who could I go with to earn upwards of 10% APY or higher on an SEP-IRA?
Where have you seen "most figures" suggesting 10-12%?
For what it's worth, folks often use figures as high
as 10%-12% for a projected *long*-run return on a ****tfolio
which contains *stocks*. Not short run, nor guaranteed
in any way, and not bonds or CDs. After inflation is
taken into account the long-run return of large-cap
equities has been more like 7-8%. But to acheive that
return, there's a lot of risk involved - in some years,
such a ****tfolio can go down a *lot*. During just the
first 2-1/2 months of this year, money invested in an
S&P 500 index fund (a very popular option for SEP-IRAs)
would have lost more than 11%. In 2002, it would have
lost more than 22%. But in the 5 years through the
end of Feb, it would, in fact, have averaged about 10% gain.
So, again, where exactly did you see those 10-12%
returns? What were the investments? And if you want
those kinds of returns, are you willing to take the
risk that along the way, you may lose money (and that
there's no guarantee that even in the long-run you'll
get those kinds of returns)?
--
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