Do you have a Roth IRA with your favorite mutual fund company? Do you have several? How do you choose which investments to include in a Roth IRA?

Many people mistakenly think that a Roth IRA is an investment unto itself. Actually, it is a tax classification that can encompass many types of investments, not just a plain-vanilla mutual fund or a bond fund.

Then the question becomes, “Which types of investments should you hold in a Roth IRA or multiple Roth IRAs?” There are several types of investments you may want to consider above and beyond a simple index fund.

International Stocks

It has been a rocky road in Europe this year, but that does not mean that all international companies and their stocks are doing badly. Many financial planners have laid low in talking about developing markets, BRIC countries (Brazil, Russia, India, and China) and others. But international companies cannot be ignored.

The United States’ stock market capitalization is relatively small when compared to the rest of the world’s stock markets. Also, nearly half of sales at S&P 500 companies now come from abroad. What’s more, S&P companies getting more than half their revenue abroad are estimated to grow profits more than 21% in the first quarter of 2017, compared to 10.6% for those getting more than half their revenue in the U.S., according to Thomson Reuters Eikon. It is impossible to escape the allure of international companies.

Dividend Payers

Among the best investments to hold in your Roth IRAs are great dividend stocks. I love companies that pay a dividend. Even when the stock market seems to be on a rollercoaster, dividend stocks provide investors with a rate of return and an income while they wait for a stock’s share prices to improve again. Maybe your chosen stock has been beat up by the overall market and caught up in the undertow, but with a good dividend payer, you can wait it out and earn a return in the process.

Look for companies that have continually increased their dividends year in and year out. You also want to look for a company with a good dividend yield that will at least keep up with the rate of inflation while you wait for the share price to rise.

Real Estate Investment Trusts (REIT)

Similar to dividend stocks, REITs or real estate investment trusts are another great choice if you are looking to diversify your portfolio of Roth IRA holdings. A real estate investment trust can invest in many different types of real estate ventures such as commercial malls, office space, residential rental properties, and a host of other categories. REITs are required to distribute 90% of their income each year as a dividend to their shareholders. This makes a REIT very much like a dividend-paying stock—and thus another great choice as investments to hold in your Roth IRA.

Precious Metals

I’m personally not a big fan of gold because of its tremendous volatility. It makes me nervous, but there is definitely some rationale for owning a basket of precious metals. Precious metals offer a wide range of investment options from the allure of gold to silver, copper and many other types of metals. Keep these types of investments as a relatively small portion of your overall retirement portfolio. While they provide you with diversification—and often move inversely to stocks and other more conventional portfolio choices—they are still risky investments that you should not gamble your entire retirement on.

Also be aware that there are special rules about holding gold and other precious metals in IRAs, either Roth or Traditional. You may need a self-directed IRA or precious metal exchange-traded fund (ETF). With actual gold, you may incur additional fees for storage.


Am I talking about pork bellies and wheat futures when I tell you that commodities should be one of the many investments to hold in your Roth IRA? Yes and no. Buying futures contracts is extremely risky, volatile and complex, and it is not for everyone. That is why you should leave that kind of investing for the professionals. That does not mean that you cannot find a great mutual fund or ETF that can provide you with a diversified basket of commodities that could round out your investment portfolio and Roth IRAs.


Index funds that track major indices such as the S&P 500, Russell 2000, Wilshire 5000 or Dow Jones Industrial Average typically make up the bulk of investment portfolios and Roth IRA account balances. That is definitely a great strategy to have, but it is not the only one. There are many options for diversifying your Roth IRA that have the potential to pay an excellent rate of return.


Compare Popular IRA Providers