• A bank is one of the places to invest in an IRA.gold bank image by John Sfondilias from Fotolia.com
  
  An IRA, or individual retirement account, is a holding account for your investments. Holding a variety of stocks, mutual funds, real estate or other investments in your IRA is the best way to diversify and minimize your risks, although some people choose to only have one type of investment in their holding account. Investing in an IRA is an excellent way to make use of compound interest and to watch your money grow over time.
  
  

Choosing an IRA

• A Roth IRA is the wisest choice for people who do not earn a great deal of money. The earnings can be withdrawn at retirement tax-free, but in the meantime, you cannot use it for a tax deduction.
  
  Traditional IRA's are typically tax-deductible. This may be your best choice if tax deductions are important to you now. When you retire, you can withdraw the money and it will be taxed at the current rate.
  
  

Checking the Rules and Requirements

• There is no minimum age to open an IRA, although you do have to have earned income. Contributions must be made by April 15 each year to count as a deduction for the previous year. As of June 2010, you can contribute up to $5,000 in a traditional IRA or a Roth IRA if you are under the age of 50, and those over 50 can contribute up to $6,000.
  
  

Opening an IRA

• You can open an IRA account online or at a discount brokerage firm, credit union, bank, mutual fund company or other financial institution. Talk to financially savvy friends to get a recommendation for a place that will help you to learn about your options and teach you about investing. Opening the account is uncomplicated, you will just need to fill out the appropriate forms and decide if you want to invest in it monthly, using automatic deductions, or do it in a bulk sum each year.
  
  

Reaping the Benefits

• Contributing to an IRA is a wise way to save money for your retirement years. If you authorize automatic deductions to your IRA each month, you will never see the money, so this is the most effective way to save. If you are highly disciplined and can save money toward a bulk sum each year, you may wish to contribute in that manner.