The benefits of investing your IRA savings
You're saving in an IRA. Congrats! You've taken an important step on the road to a comfortable retirement. But for most people, that's not enough. The next step is investing your savings for long-term growth. And history shows that the best way to do that over the long term—and outpace inflation—is by investing in stocks.
And starting in 2020, as long as you are still working, there is no age limit to be able to contribute to a Traditional IRA. The Secure Act, signed into law on December 20, 2019, removed the age limit in which an individual can contribute to an IRA. The top age prior to the law was 70½.
Of course, stock prices can have bigger price swings than bonds or cash. But on average over longer-term periods, stocks have dramatically outperformed bonds and cash. From 1926 through 2016, stocks returned an average 10% annually, versus 5.4% for bonds and 3.5% for short-term investments. If you had invested $100 in stocks in 1926, it would be worth $587,000, versus $11,800 if you'd invested in bonds and $2,300 in short-term instruments.1
Still tentative about investing in stocks? Remember, if you have a decade or more until retirement, you should be able to ride out market volatility, as long as you continue to save and invest. Indeed, market pullbacks, when prices are low, are often the best times to invest for long-term growth potential. So consider your time horizon and stomach for risk, and put your IRA dollars to work for your future.
What $100 would be worth over the history of the stock market
Your IRA investment choices
IRAs allow you to choose from individual securities, such as stocks, bonds, certificates of deposit (CDs), exchange-traded funds (ETFs), or a "single-fund" option. But before you decide what investments to pick, you should consider how you want to manage them: You can lean on the help of a professional, or do the work yourself.
Not enough time, knowledge, or interest to build and manage an asset mix? Consider a professionally managed solution or single-fund strategy.
Investment advisory offerings
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Single-fund strategy
Fidelity Freedom® Funds are single-fund investment strategies that can help take the guesswork out of building and maintaining an age-based retirement portfolio.
Interested in choosing and managing your own investments? You can choose individual securities to build your own portfolio. Plus, Fidelity offers commission-free trades for online US stocks and ETFs* and when you open a new retail brokerage account.