Where should I be investing money within my Roth IRA?

I'm 23 years old, just opened a Roth IRA, and I'm looking for the best strategy to grow my money. Obviously I have a long time horizon so I'm trying to determine the best investments that will help my funds grow over the long term. What do you recommend?

Investing, IRAs
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May 2017
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If you are 23 years old and you just opened your Roth IRA you most likely have less than $11,000 in your account since you are limited to $5500 annual contributions. Regardless of whether you have contributed one year with only $5500 or two for that size of an account a fund would be advisable. 

The power of diversification is important for those funds. Diversifying a portfolio in order to reduce exposure to risk by combining a variety of different investments, such as stocks and bonds/fixed income which are unlikely to all move in the same direction. The goal of diversification is to reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes or industries, sectors or individual companies move up and down in value at the same time or at the same rate. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions. 

And the best way to diversify a small account or portfolio is through a basket of securities. Mutual funds have many different choices that would be appropriate for a Roth IRA with a long term investment horizon.

 

 

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