What is the Best Roth IRA?

Answer 1

Many financial experts recommend that adults of all ages fund their employer-sponsored 401k retirement account fully in order to take advantage of an employer-matching feature, if available. After the employer-matching feature in a 401k account is fully utilized, many experts recommend that you then contribute funds to a Roth IRA. The contributions you make to a Roth IRA are used with taxed dollars. However, funds can be withdrawn later tax-free. This includes the growth in value on the funds. So what is the best Roth IRA for you to invest in?

The Type of Investments

When you invest in a Roth IRA, you typically have flexibility to invest in any number of stocks, bonds, mutual funds and more. You can choose to fully invest in stocks or another single type of investment, or you can diversify this account. While you do have some choices available, the financial institution who you open your account with may limit your options. Some financial institutions may offer you only a handful of investment options while others may offer you dozens of different options. Typically, a greater selection of options is better, but this is not always the case. Consider your need for growth versus your tolerance for risk with your investments. Then, ensure that the financial institution offers you several different investment options that meet those needs.

Fully Funding Your Roth IRA

The federal government limits the amount of contributions you can make to your Roth IRA in a calendar year, but this contribution limit does change periodically. Each financial institution that offers a Roth IRA will allow you to fully max out your contributions for a calendar year, so this is not a feature to compare. However, after spending so much time and effort finding the right financial institution to use for your Roth IRA, you do want to take steps to fully fund your account to the maximum level allowed. Consider monitoring the government rules regarding contribution limits so you can make regular adjustments to your Roth IRA contributions as needed. Keep in mind that the best Roth IRA is one that meets your needs in terms of risk and growth and that also is fully funded.

Answer 2

Many investors are choosing to open a Roth IRA to supplement their retirement planning efforts. A Roth IRA offers you many benefits, but the most important benefit is the ability to make tax-free withdrawals in the future. Many financial institutions provide you with the ability to open a Roth IRA, but you may be wondering who offers the best Roth IRA. There are several factors to consider when answering this question.

Your Investment Objectives

The main objective in mind when opening a Roth IRA is to plan for the future and save for retirement. However, each investor may have different specific retirement objectives they need to meet. For example, a younger investor who has many years left until retirement may be interested in investing in high yield stocks and mutual funds. An investor who is only a few years away from retirement, however, may be interested in less risky and lower yield investments like bonds, certain types of mutual funds and CDs. Many financial institutions may offer you each of these investment options, but some may have lower fees and greater choices available than others. Keep your own investment objectives in mind when trying to decide which financial institution is best for you.

Your Contributions

The best Roth IRA is certainly a fully funded Roth IRA. When you are searching for a great Roth IRA that best meets your needs, consider how you will fund your account. You may first want to fully fund your employer-sponsored retirement account to benefit from an employer-matching program available. However, many experts will recommend that you then fully max out your Roth IRA contributions allowed with additional retirement funds you may have available. Keep in mind that the more money you can invest now and the longer you can keep the money in the account, the greater the possibilities for growth. Because of this, you may consider reducing your spending or cutting back expenses in other areas of your life to ensure that you fully max out your permitted Roth IRA contributions. Also, bear in mind that those who are closer to retirement are currently able to contribute a greater amount of money to their account. These limits can change year by year, so it is important to stay up-to-date on these changes and ensure you meet the maximum contribution limit on your account each year.