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What is the Best Mutual Fund for a Roth IRA?

By Edited Nov 13, 2013 0 0

Mutual Funds for Roth IRA?

When opening up an investing account, it is important to ask what is the best mutual fund for my Roth IRA retirement account? A Roth IRA offers great tax benefits, but you want to make sure you are getting good gains from your investments, so it is important you choose wisely if you do choose a mutual fund. 

In a Roth IRA you can invest in stocks, but if you are the type of person who wants to invest but

doesn't have time to pick out individual stocks, and you do not want to take on much risk, than a mutual fund is probably for you. Mutual funds are professionally managed and offer a number a securities. Just make sure the expense ratio isn't too high, and over time you should put together some nice gains with dividend reinvestment and automatic dollar-cost averaging!

On the Roth IRA - This is a great retirement account because you do not have to pay taxes on income and earnings in your Roth as they add up, and you usually don't have to pay tax when you take withdrawals. Therefore you can start investing early and watch your money grow over time, and when you are ready to retire and take the money out, you (most likely) won't have to pay taxes on the gains you've made!

Head to Morningstar for Mutual Funds
I think a mutual fund could be better for your Roth IRA than stocks because you are investing for the long haul. If you pick stocks now, will those companies still be around in 20-40 years? And will they perform over that time frame. You don't have to worry about that in a basic mutual fund because they include a good number of stocks.

What mutual fund is for you? That is really up to you. You must research the available mutual funds. One good website is Morningstar.com. I personally prefer the Fidelity funds, like the Fidelity Trend Fund - This fund "invests in companies that FMR believes have above-average growth potential (stocks of these companies are often called "growth" stocks)." It has a low expense ratio and should perform well over the long-term.

In conclusion, when putting together your Roth IRA account,  I think taking a look at a professionally-managed mutual fund is a great idea. Make sure you get one that has a low cost ratio and a proven track record. Also make sure you research different funds before you choose which mutual fund you think is right for your Roth IRA.



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