Is an IRA a mutual fund?
The short answer is no. The biggest difference between an IRA and a mutual fund is that an IRA is a type of account that can be funded with an investment like a mutual fund, an annuity or any number of other investment vehicles.
It usually depends on the institution that you’re opening the IRA with as to what type of investment it can be funded with. For example, a mutual fund company will usually offer mutual funds to invest your IRA in, an insurance company will offer annuities, a bank will offer CDs and a brokerage firm may offer stocks and bonds.
As with any investment decision, deciding which type of vehicle to use to fund your IRA will depend on your objectives, your risk tolerance and your investing timeline. Just keep in mind: The sooner you start your IRA, the longer your assets may grow to help you meet your retirement goals.
Let’s take a look at this handy chart for details on the differences of each type of IRA.