An IRA is a type of tax-advantaged investment account that can help people plan and save for retirement. It allows for a wide range of investments, but as with any volatile investment, people could lose money in an IRA if their investments are affected by market ups and downs. To minimize the risk of losses, it is recommended to diversify investments between different types of stocks. People who make too much money to contribute to a Roth IRA can still contribute to a non-deductible IRA, which is available to anyone regardless of their income.
The main benefit of an IRA is that your savings can grow with deferred taxes. But what happens when your investments go down instead of up? If you invest all the money from your Roth IRA into a company, you may be exposed to large losses. If that particular company goes bankrupt, you can lose all your money. This is a very unlikely scenario; if you take the necessary precautions, it will be difficult for most people to lose everything.
Most financial experts advise against withdrawing retirement money even when it starts to lose value. The reasoning is that when the market improves again, the ideal is for your money to “recover” and regain lost profits. With proper planning, you can minimize the risk of your IRA falling apart and also take advantage of some potential tax breaks if your IRA loses value compared to its tax base. Yes, you can lose money with a Roth IRA.
Your investment options within account and market conditions will determine whether the value of your Roth IRA rises or falls. However, you can't lose money with a Roth IRA fixed-index annuity.