Imagine saving for years in an IRA, only to discover close to retirement that your investments haven't performed as expected. Or worse, that part of your life savings hadn't been invested in the stock market for long-term growth potential.
It could happen.
“People often aren’t aware that they need to set up their investments—or that their IRA isn’t already invested,” says Rita Assaf, vice president of retirement products at Fidelity. Many assume their IRA contributions are automatically invested, but that's not always the case.
Fortunately, there's plenty of help available. Your financial services provider can guide you in choosing investments that align with your financial situation, time frame, and comfort with risk.
3 steps to consider after contributing to or rolling over money into an IRA
Contributing to an IRA is like putting money in a tax-advantaged piggy bank. To have a chance at earning a return beyond the yield offered on the core position in your IRA investment account (at Fidelity it’s a money market fund), you must invest your money.
Similarly, if you complete a rollover to an IRA, you will likely need to choose investments for those assets. In some cases, rollovers can be done “in kind,” which means the assets are rolled over into the same investments you held in your former employer-sponsored plan.
1. Check your IRA
After you receive your rollover or contribute to your IRA, look inside your account to review your investments. If you’re not sure what you’re looking at, don’t hesitate to ask your financial provider.
“Make sure that your investments make sense for you,” Assaf suggests. “If you’re overwhelmed or have questions, talk to someone or check out Fidelity’s Learn section.”
Consider investing your money in a way that lines up with your goals, financial situation, time frame, and comfort with risk. Read Fidelity Viewpoints: 3 tips for choosing investments
Tip: Starting with a financial plan can make it easier to understand and envision your goals, time frame, and the rate of return you may want to target with your overall investment mix for your retirement goal. Read Fidelity Viewpoints: 5 steps to power up your finances
2. Decide if you want to buy and manage your own investments or if you’d like some help
Investing your money offers the potential for growth. The question is, would you like to choose your own investments and manage them or get some help?
If you’re managing your own investments, you can choose from ETFs, mutual funds, stocks, bonds, and CDs.
Fidelity suggests aiming for a diversified mix of investments that targets a general range of risk and return potential that may be appropriate for your circumstances.
The goal of diversification is not necessarily to boost performance—it won't ensure gains or guarantee against losses. Diversification does, however, have the potential to improve returns for whatever level of risk you choose to target.
To learn more about getting started and building your investment mix, read Fidelity Viewpoints: How to start investing and The guide to diversification
Need help building your mix? Use Fidelity's tools.
- Get an analysis of your current portfolio, assess your financial situation, and find ideas to help you create an appropriate investment strategy in our Planning & Guidance Center.
- Or jump right in and consider a guided investment experience that includes mutual funds and ETFs: Explore investment ideas. Fidelity also offers model ETF portfolio options for consideration: ETF portfolio builder.
If you want someone to do the investing for you:
| Single-fund options | Advisory options |
| Asset allocation funds | Robo advisor
Fidelity Go® |
| Target date funds | Personalized stock portfolios
Fidelity Managed FidFolios® |
| Wealth management
Fidelity® Wealth Management |
3. Set up your investment strategy and plan for future rollovers and contributions
Whether you plan to manage your own investments or get some help, choosing a course of action that makes sense for you and then taking the next steps to get to your goals is key. Read Fidelity Wealth Management Insights: 6 reasons why you should consider investing right now.
If you need to learn more about buying or selling your investments, consider joining a demonstration of how to invest in a beginner investor class from the Fidelity Trading Strategy Desk®. For a step-by-step guide to placing trades: Trading made simple: How to trade stocks and ETFs.
Set yourself up for future success by setting up recurring investments. At Fidelity, you can set up recurring investments so that any money contributed to your IRA is automatically invested. In managed accounts, like Fidelity Go®, your contributions are invested according to the investment strategy you choose.
Review and monitor
It can make good sense to check on your investments regularly or at least annually to see if your investments are still a good fit for your goals, risk tolerance, and time horizon.