IRA versus CD -- Why Put Both Together?

"Which is better?" is the question, IRA versus CD for your retirement nest egg. The world of finance has been turned upside-down in the last eighteen months and people don't know what to do. Many have watched their investments tank, either due to the economy, corporate malfeasance or financial fraud. Simple people the world over are wondering what forces have caused such a dramatic swing in US stock markets without any fundamental changes underlying the move. How can this be?

What Is Causing the Market to Move So Much
The answer is that the market right now is being manipulated by vast amounts of available cash in the hands of institutions, hedge funds, and private investors. It is completely illogical that the components of the Dow Jones Industrial Complex could be worth 6000 one month and 10,400 a couple months later. What fundamentally changed in those 6 +/- months? The answer of course, is nothing fundamentally changed.

What is happening is that there was a huge liquidity crisis where banks, hedge funds, and institutional investors had to unwind large and complicated positions in order to meet demands for cash redemptions and the resulting margin calls on vulnerable positions. The market continues to be impacted by imbalances of supply and demand for individual stocks and cash. The result is weak institutional players are being squeezed out and bankrupted one at a time - each one causing another round of volatility as positions are folded up and liquidated.

How Does the Market Volatility Effect My IRA versus CD Decision?
The answer to the IRA versus CD question is simple: you need both in the same package. Adding an qualified Certificate of Deposit to your retirement portfolio is a terrific way to mitigate volatility (risk) in your retirement nest egg. IRA versus CD doesn't have to be either or - in fact it should be both. Having both in your retirement account dramatically alters the expected return of your account in ways that substantially reduce risk in ways that an equities only portfolio can not.