Many investment options exist for a Roth IRA, a tax-advantaged individual retirement account. 𝓀Most investors saving for retirement and looking to build a long-term, buy-and-hold portfolio may choose a mix of stocks and bonds.

The precise mix of stocks and bonds depends on two primary factors: how far the investor is from retirement and how risk-averse they are. The further an investor is from retirement, the more volatilityܫ they tolerate, and hold more stocks in their portfolio. Investors with a low-risk t🐻olerance may not be able to handle swings in the value of their portfolio and decide bonds will be a large proportion of their portfolio.

Investing Strategies

Traditional investing wisdom has claimed that a 60/40 portfolio—60% stocks and 40% bonds—will satisfy the needs of most investors and that the proportion of stocks relative to bonds should shrink as the investor ages. Another traditional yardstick for investors has been “澳洲幸运5官方开奖结果体彩网:100 minus your age” relative to stock investment. A 30-yea🌠r-old, for example, should hold 70% stocks and 30% bonds.

Some financial advisors recommend that holding a higher percentage of stocks throughout an investor’s career can greatly enhance potential returns while only marginally increasing the risks. In 2023, model portfolios were utilized given an inflationary unstable economic climate. Model portfolios add exposure to more asset classes including commodities, foreign currencies, real estate, quant strategies, and alternative investments.

Choosing Funds

Three 澳洲幸运5官方开奖结果体彩网:mutual funds for Roth IRAs carry a Morningstar Gold rating in 2024. Contribution limits for IRAs, whether Roth or traditional, are $7,000 under age 50 or $8,000 for ages 50 and over in 2024. The Roth IRA contribution limit and eligibility to contribute depend on an individual's income level.

Vanguard Dividend Growth Fund (VDIGX)

As of Dec. 5, 2023, VDIGX holds 42 stocks across several sectors including healthcare, technology, and consumer staples. The fund focuses on top companies such as Microsoft and Northrup Grumman Corp. that can grow their dividends over time. One of the fund’s risks is that returns from dividend-paying stocks may trail returns from the overall stock market during any given period.

• Expense Ratio: 0.30%
• Minimum Investment: $3,000
• NAV: $48.74 billion
• 5-Year Average Return: 11.47%
• Inception Date: May 15, 1992

Dodge & Cox International Stock Fun✅d (DODFX)

DODFX holds a portfolio of equity securities issued by medium-to-large, non-U.S. companies that have a favorable outlook for long-term growth according to Morningstar. As of Dec. 5, 2023, the fund's holdings of 69 companies include Sanofi and Novartis.

• Expense Ratio: 0.62%
• Minimum Investment: $1,000 (for IRA)
• NAV: $44.7 billion
• 5-Year Average Return: 6.56%
• Inception Date: May 1, 2001

FPA Crescent Fund (FPACX)

As of Dec. 5, 2023, FPACX holdings include a mix of bonds, stocks, and cash equivalents. Its portfolio holds U.S. government bonds as well as shares of Comcast and Alphabet. According to the fund objective, FPACX hopes to generate equity-like returns over the long term by incurring less risk than the market.

• Expense Ratio: 1.09%
• Minimum Investment: $1,500
• NAV: $9.21 billion
• 5-Year Average Return: 9.33%
• Inception Date: Mar. 1, 1996

Frequently Asked Questions (FAQs)

The Bottom Line

Most investors saving for retirement through a Roth IRA will want some 澳洲幸运5官方开奖结果体彩网:combination of stocks and bonds. This combination can be achieved by investing in a broad stock index fund, a broad bond fund, and peℱrhaps an international stock fund.