Investing ideas for your IRA

Don’t skimp on growth. Invest that money so it works for you.

  • Saving for Retirement
  • IRA
  • Roth IRA
  • Saving for Retirement
  • IRA
  • Roth IRA
  • Saving for Retirement
  • IRA
  • Roth IRA
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Key takeaways

When choosing investments, think about how comfortable you are with risk.

Consider a higher allocation to stocks and stock mutual funds if retirement is many years away.

You’ve contributed to an IRA—congratulations. The next step is to invest that money—and give it the potential to grow. Fidelity believes one of the best ways to do that over the long term is by investing as much as you are comfortable with in a diversified portfolio of stock mutual funds, ETFs, or individual stocks. As a general rule, the more time one has to save, the greater the percentage of money that could be allocated to stock mutual funds. And for those closer to retirement, a healthy allocation to stocks may still be appropriate. These days retirement may last for decades, so the money will likely still need to grow even after retirement.

How much in stocks based on risk

It’s important that one’s stock exposure matches his or her comfort with risk, investment horizon, and financial situation. That means being comfortable with the ups and downs of the stock market and not selling in a rush when stocks fall, which can lock in losses and potentially make it harder to recover from those losses.

The four investment mixes shown here provide an idea of what percentage of stocks to consider investing in, based on risk. Among these four mixes, the conservative portfolio has the least amount of risk (as measured by the worse periods of past performance), and the aggressive the most. It also shows how each performed over a long period of time, in different markets.

How much in stocks based on age

Age can also be used as an initial guideline when determining how much to invest in stocks. That's because the longer the money will be invested, the more time there is to ride out any market ups and downs, and growth is important. For instance, those younger than age 50 may want to consider investing as much in stock mutual funds as they are comfortable with. The chart shows how much a $5,500 IRA investment could be worth after 35 years.

For those age 50 or older, growth remains important—after all, retirement could last three decades or more. But with retirement nearer, investors must balance that need for growth against the need to protect what they have saved.

What kind of investor are you?

Don’t have the time or interest it would take to choose investments and maintain an appropriate mix of investments in your IRA? Consider a professionally managed account or target date fund. Target date funds let an investor pick the fund with the target year closest to his or her retirement year. The target date fund manager then selects, monitors, and adjusts the investment mix over time.

For those doing it on their own, a diversified mix of investments is important. That way, a portfolio isn’t dependent on any one type of investment, although diversification does not ensure a profit or guarantee against loss. Asset allocation funds, sometimes called target risk funds, can be a simple way to diversify your portfolio using a single fund. If you want to do it yourself, consider funds that hold a mix of investments in companies both big and small, from different parts of the world, and in different industries and sectors.

Low-fee investments such as index funds or exchange-traded funds (ETFs) that simply track the broad market through a benchmark index, may also be a consideration.

Get started

Here are three ways to help get started when investing in an IRA.

  1. Use our tools.
    Get an analysis of your current portfolio, assess your financial situation, and find ideas to help you create an appropriate investment strategy with our Planning & Guidance Center.
  2. Choose investments.
    For those who want to invest in mutual funds or ETFs, there are a number of ways to choose.
  3. Let someone else manage.
    For those who prefer to have an investment professional manage an IRA, learn about Fidelity managed accounts.

Put your money to work.

For those with 30 or 40 years until retirement, who are comfortable with risk, it’s important to build long-term growth potential into a portfolio through a significant allocation to stocks. Even for those closer to retirement age—say within 10 to 20 years—stocks can still play an important role.

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This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.

Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

1. Data Source: Ibbotson Associates. Stocks are represented by the Standard & Poor’s 500 Index (S&P 500® Index). The S&P 500® Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Bonds are represented by the Barclays U.S. Intermediate Government Bond Index, which is an unmanaged index that includes the reinvestment of interest income. Short-term instruments are represented by U.S. Treasury bills, which are backed by the full faith and credit of the U.S. government. Indexes are unmanaged, and you cannot invest directly in an index. Foreign stocks are represented by the Morgan Stanley Capital International Europe, Australasia, Far East Index for the period from 1970 to the last calendar year. Foreign stocks prior to 1970 are represented by the S&P 500®Index. The purpose of the target asset mixes is to show how target asset mixes may be created with different risk and return characteristics to help meet an investor’s goals. You should choose your own investments based on your particular objectives and situation. Be sure to review your decisions periodically to make sure they are still consistent with your goals.

Past performance is no guarantee of future results.

Diversification and asset allocation do not ensure a profit or guarantee against loss.

Investing involves risk, including risk of loss.

Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

Target date investments are generally designed for investors expecting to retire around the year indicated in each investment's name. The investments are managed to gradually become more conservative over time. The investment risk of each target date investment changes over time as the investment's asset allocation changes. The investments are subject to the volatility of the financial markets, including that of equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, and foreign securities. Principal invested is not guaranteed at any time, including at or after the investments' target dates.

ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.

ETFs are subject to market fluctuations of their underlying investments and may trade at a discount to NAV.

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Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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