7 IRA mistakes to avoid

Not knowing what’s in your IRA

An IRA is a kind of account, not a particular financial instrument like a savings bond or a certificate of deposit.

"People don’t understand that ‘IRA’ is nothing more than a label slapped on an investment," says Piedmont Community College's Bill Pratt. "It’s not a product; it’s simply a classification that says the government won’t tax this like they do other stuff if you follow certain rules."

Many different investments can qualify for an IRA: mutual funds, CDs, stocks and bonds, even some real estate.

But Pratt says he is surprised by how often people tell him they have an IRA, yet don’t know what’s in it.

You need to know. Investments with a higher upside but greater risk like stocks make sense early on. Later, you’ll want to be more conservative. It doesn’t have to be hard: Mutual fund companies offer funds that automatically adjust the mix of investments based on age.