I have some money I would like to put into very long term savings. At least 40+ years. What's the best way to save the money?

I would like to accrue as much interest as possible and get a headstart on retirement. But I don't really know anything about this area.

From what I read a long term Roth IRA is the best way to save at this stage. Which would involve me putting in max 5500 every year until retirement.

How does one go about doing this? And is there a better way to save the money?

  • 4
    Check out these recent questions: Oversimplify... and Best starting options... and other related questions. After reading those, you might have some more specific questions.
    – Ben Miller
    Commented Jul 27, 2015 at 17:07
  • @BenMiller see my revised post Commented Jul 27, 2015 at 18:38
  • Are you saying you have a large lump sum you'd like to invest for retirement? Also, do you expect to be in a lower or higher tax bracket in the future? Do you expect that income taxes will be higher or lower in the future? These questions will help you decide what retirement vehicle makes the most sense for you.
    – JohnFx
    Commented Jul 28, 2015 at 0:34
  • It's not high enough to be taxed, but for me it's a pretty substantial amount. I suspect my income tax to go up in the future. I want to put it away for very long term investment. I don't need to touch it for a couple decades Commented Jul 28, 2015 at 0:36
  • 1
    In addition to the questions mentioned by Ben Miller, look at First time investor.... Commented Jul 28, 2015 at 11:46

5 Answers 5


I'd open the Roth IRA account and fund for 2015 and 2016. For the very long term, I'd learn about index funds, specifically a low cost S&P mutual fund or ETF.


I know of no way to answer your question without 'spamming' a particular investment.

First off, if you are a USA citizen, max out your 401-K. Whatever your employer matches will be an immediate boost to your investment.

Secondly, you want your our gains to be tax deferred. A 401-K is tax deferred as well as a traditional IRA.

Thirdly, you probably want the safety of diversification. You achieve this by buying an ETF (or mutual fund) that then buys individual stocks.

Now for the recommendation that may be called spamming by others :

As REITs pass the tax liability on to you, and as an IRA is tax deferred, you can get stellar returns by buying a mREIT ETF.

To get you started here are five:


Lastly, avoid commissions by having your dividends automatically reinvested by using that feature at Scottrade. You will have to pay commissions on new purchases but your purchases from your dividend Reinvestment will be commission free.

Edit: Taking my own advice I just entered orders to liquidate some positions so I would have the $ on hand to buy into MORL and get some of that sweet 29% dividend return.


What explains the most of the future returns of a portfolio is the allocation between asset classes. In the long term, stock investments are almost certain to return more than any other kinds of investments. For 40+ years, I would choose a portfolio of 100% stocks.

How to construct the portfolio, then? Diversification is the key. You should diversify in time (don't put a large sum of money into your stock portfolio immediately; if you have a large sum to invest, spread it around several years). You should diversify based on company size (invest in both large and small companies). You should also diversify internationally (don't invest in just US companies). If you prefer to pick individual stocks, 20 very carefully selected stocks may provide enough diversification if you keep diversification in mind during stock picking. However, careful stock picking cannot be expected to yield excess returns, and if you pick stocks manually, you need to rebalance your portfolio occasionally.

Thus, if you're lazy, I would recommend a mutual fund, or many mutual funds if you have difficulty finding a low-cost one that is internationally diversified. The most important consideration is the cost. You cannot expect careful fund selection to yield excess returns before expenses. However, the expenses are certain costs, so prefer low-cost funds. Almost always this means picking index funds. Avoid funds that have a small number of stocks, because they typically invest only in the largest companies, which means you fail to get diversification in company size. So, instead of Euro STOXX 50, select STOXX 600 when investing to the European market. ETFs may have lower costs than traditional mutual funds, so keep ETFs in mind when selecting the mutual funds in which to invest.

For international diversification, do not forget emerging markets. It is not excessive to invest e.g. 20% to emerging markets. Emerging markets have a higher risk but they also have a higher return. A portfolio that does not include emerging markets is not in my opinion well diversified.

When getting close to retirement age, I would consider increasing the percentage of bonds in the portfolio. This should be done primarily by putting additional money to bonds instead of selling existing investments to avoid additional taxes (not sure if this applies to other taxation systems than the Finnish one). Bond investments are best made though low-cost mutual funds as well. Keep bond investments in your local currency and risk-free assets (i.e. select US government bonds).

Whatever you do, remember that historical return is no guarantee of future return. Actually, the opposite may be true: there is a mean reversion law. If a particular investment has returned well in the past, it often means its price has gone up, making it more likely that the price goes down in the future. So don't select a fund based on its historical return; instead, select a fund based on low costs. However, I'm 99% certain that over a period of 40 years, stocks will return better than other investments.

In addition to fund costs, taxes are the other certain thing that will be deducted from your returns. Research what options you have to reduce the taxes you need to pay. 401-K was explained in another answer; this may be a good option.

Some things recommended in other answers that I would avoid:

  • Real estate investment trusts (REITs): real estate investments over very long term typically return less than stock investments. Thus, I would put 0% of the investment amount to real estates and 100% to stocks. Note also that many REITs have high amounts of debt leverage, which you may not want in your portfolio.
  • LendingClub. This is not a traditional investment so there may be great risks in this kind of non-conventional investment. There is over 100 years of historical data from returns on stock investments. The same cannot be said for LendingClub.

I recommend you two things:

  1. Invest in ETFs, Exchanged-traded fund, basically is a set of stock/securities that has the major companies of one country. For example, Standard & Poor's 500 has the top 500 companies in USA, NASDAQ-100 has the 100 top high tech companies. The good thing about this is that is already diversified and if the last companies, say, 99th and 100th from NASDAQ-100 crashes, then they will be replaced for better companies.
  2. LendingClub. This company allows you to lend money to other people, but the best part is that you can diversify. The least you can lend is $25 USD. For example, every month you can lend 300 dollars and distribute it to 12 loans.

I like these investments because they are not high risk.

I hope this helps.

  • Why the -1 Downvote? Care to explain? Commented Aug 10, 2015 at 6:12
  • 2
    Not the downvoter, but I'm skeptical about LendingClub as an investment (though it's a fine idea if your goal is to help other people). I'd also point out that traditional mutual funds still exist and have some advantages over ETF's ... and that picking the right funds is important and you haven't addresses that.
    – keshlam
    Commented Aug 10, 2015 at 13:58
  • FYI - there was no DV. Your answer was flagged as spam for the mention of Lending club. When a mod rejected the flag, the DV was cancelled off. Commented Aug 14, 2015 at 18:55

Say you have $15,000 of capital to invest. You want to put the majority of your capital into low risk investments that will yield positive gains over the course of your working career.

$5,000: Government bonds and mutual funds, split how you want.

$9,500: Low risk, trusted companies with positive historical growth. If the stock market is very unfamiliar for you, I recommend Google Finance, Yahoo Finance, and Zack's to learn about smart investments you can make. You can also research the investments that hedge fund managers and top investors are making. Google "Warren Buffett or Carl Icahn portfolio", and this will give you an idea of stocks you can put your money into.

Do not leave your money into a certain company for more than 25 years. Rebalance your portfolio and take the gains when you feel you need them. You have no idea when to take your profits now, but 5 years from now, you will be a smart and experienced investor.

A safe investment strategy to start is to put your money into an ETF that mimics the S&P 500. Over the past 20 years, the S&P 500 has yielded gains of about 270%. During the financial crisis a few years back, the S&P 500 had lost over 50% of its value when it reached its low point. However, from when it hit rock bottom in 2009, it has had as high percentage gains in six years as it did in 12 years from 1995 to 2007, which about 200%. The market is very strong and will treat your money well if you invest wisely.

$500: Medium - High risk Speculative Stocks

There is a reason this category accounts for only approximately 3% of your portfolio. This may take some research on the weekend, but the returns that may result can be extraordinary. Speculative companies are often innovative, low priced stocks that see high volatility, gains or losses of more than 10% over a single month. The likelihood of your $500 investment being completely evaporated is very slim, but if you lose $300 here, the thousands invested in the S&P 500, low risk stocks, government bonds, and mutual funds will more than recuperate the losses.

If your pick is a winner, however, expect that the $500 investment could easily double, triple, or gain even more in a single year or over the course of just a few, perhaps, 2-4 years will see a very large return.

I hope this advice helps and happy investing! Sending your money to smart investments is the key to financial security, freedom, and later, a comfortable retirement.

Good luck,

Matt McLaughlin

  • 1
    "Over the past 20 years, the S&P 500 has yielded gains of about 270%" - the 20 years ending Dec 2014, the S&P returned 556%. Without dividends, the index was up 348%. Commented Aug 14, 2015 at 18:52
  • This is investment opinion told as though it is fact.
    – Corvus
    Commented Aug 19, 2015 at 16:28
  • This is one moderately standard approach. The exact percentages can and ideally should be tuned to reflect your personal risk tolerance and horizon before the money is likely to be needed, but the basic diversification pattern across these categories is very common and has historically worked fairly well... again, depending on how you balance this diversification. If you ask an independent investment advisor how to get started, they'll give you something that resembles this, tuned to your needs.'
    – keshlam
    Commented Sep 14, 2015 at 2:42
  • As I've said elsewhere, traditional low-load mutual funds are still a perfectly reasonable alternative to ETFs. Look at the relative costs and convenience of ownership...
    – keshlam
    Commented Dec 25, 2015 at 12:45

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