I'm 25, I've invested most of my Roth IRA in the stock market, and have recently moved money to a peer to peer lending account for better compound interest returns.

Where else should I consider investing Roth IRA money that I will not use for 20-30 years?

  • Foreign stocks, REITs, and Precious Metals would be a few other ideas to note.
    – JB King
    Jul 2, 2014 at 5:56
  • Note that there are mutual funds/ETFs for all of the options @JBKing mentions in his comment. So you don't have to choose between gold and palladium; you can easily invest in both.
    – dg99
    Jul 3, 2014 at 15:32
  • 1
    Bonds/Gilts and possibly commercial property trusts ( REIT's) come to mind
    – Pepone
    Sep 21, 2014 at 21:12

5 Answers 5


That depends, really.

Generally speaking, though - Roth IRAs are THE PLACE for Stock-Market/Mutual-Fund investing. All the off the wall (or, not so off the wall) things like Real Estate investments, or buying up gold, or whatever other ideas you hear from people - they may be good or bad or whatnot. But your Roth IRA is maybe not the best place for that sort of thing.

The whole philosophy behind IRAs is to deliberately set aside money for the future. Anything reasonable will work for this. Explore interesting investment ideas with today's money, not tomorrow's money.

That being said - at your age I would go for the riskier options within what's available.

If I were in your situation (and I have been, recently), I would lean toward low-fee mutual funds classified as "Growth" funds.

My own personal opinion (THIS IS NOT ADVICE) is that Small Cap International funds are the place to be for young folks. That's a generalized opinion based on my feel for the world, but I don't think I'm personally competent to start making specific stock picks. So, mutual funds makes sense to me in that I can select the fund that generally aligns with my sense of things, and assume that their managers will make reasonably sound decisions within that framework. Of course that assumption has to be backed up with reputation of the specific MF company and the comparative performance of the fund relative to other funds in the same sector.

As to the generalized question (how else can you work toward financial stability and independence), outside of your Roth IRA: find ways to boost your earning potential over time, and buy a house before the next bubble (within the next 18 months, I'm GUESSING).



To back up a bit, mutual funds are the stock market (and the bond market). That is, when you invest in a mutual fund, your money is ultimately buying stocks on the open market. Some of it might be buying bonds. The exact mix of stocks and bonds depends on the mutual fund. But a mutual fund is just a basket of stocks and/or bonds (and/or other, more exotic investments).

At 25, you probably should just be investing your Roth IRA in index stock mutual funds and index bond mutual funds. You probably shouldn't even be doing peer-to-peer lending (unless you're willing to think of any losses as the cost of a hobby); the higher interest rate you're getting is a reflection of the risk that your borrowers will default. I'm not even sure if peer-to-peer lending is allowed in Roth IRA's.

Investing in just stocks, bonds, and cast is boring, but these are easy investments to understand. The harder the investment is to understand, the easier it is for it to be a scam (or just a bad investment). There's not necessarily anything wrong with boring.


In general, investors with a long period of time until they would need to withdraw the cash are best off holding mostly equities. While the dividends that equities would return are less than the interest you would get in peer-to-peer lending, over long periods of time not only do you get the dividends from equity investment but the value of the stock will grow faster than interest on loans.

The higher returns from stocks, however, comes with more risk of big downturns. Many people pull their investments out of stocks right after crashes which really hurts their long term returns. So, in order to get the benefit of investing in stocks you need to be strong enough to continue to hold the stocks through the crash and into the recovery.

As for which stocks to invest in, generally it is best to invest in low-fee index funds/etfs where you own a broad collection of stocks so that if (when) any one stock goes bust that your portfolio does not take much damage. Try to own both international and domestic stocks to get good diversification. The consensus recommends adding just a little bit of REITs and bonds to your investments, but for someone at 25 it might not be worth it yet.

Warren Buffett had some good thoughts on index investing.


Many investment companies are also offering target retirement date portfolios to invest in. They manage reducing the risk over time so you don't have to worry about it if you choose not to.


You're technically 'allowed' to do other investments with your Roth, but you get taken to the cleaners by the financial 'services' community who wants to take a slice. Non-securities investments from a Roth typically require a 'custodian' or other intermediary to handle your investment, e.g. buying silver coins and paying someone else to hold them. Buy these with cash and hold them yourself, assuming you trust yourself more than some stranger.

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