Building Wealth in a Roth IRA: What Assets Should You Actually Buy

When you’re planning for retirement, understanding what to buy with a Roth IRA can make the difference between a modest nest egg and substantial wealth. While the account itself isn’t an investment—it’s a container that holds investments—the choices you make inside it will directly shape your financial future. The key to maximizing a Roth IRA isn’t complicated: prioritize assets with strong growth potential while avoiding those that waste your tax advantages.

A Roth IRA stands out in the retirement landscape because of its unbeatable tax structure. You contribute after-tax dollars upfront, but everything that grows inside the account—and eventually, everything you withdraw in retirement—stays tax-free. If you’re 59½ or older and have maintained the account for at least five years, you’ll pull out your gains without owing the IRS a penny. Beyond that, there are no Required Minimum Distributions forcing you to deplete the account, and you can withdraw your contributions whenever needed without penalties.

Why Most People Are Leaving Money on the Table

Here’s where the strategy matters. Many investors make a critical mistake: they open a Roth IRA at a traditional bank and fill it with savings accounts, CDs, or money market funds. While these vehicles are safe, they earn minimal returns and completely fail to leverage the tax-free advantage that makes a Roth IRA special. You’re essentially paying for premium real estate but storing cardboard boxes inside.

The better approach is opening your Roth IRA with an online broker—platforms like Fidelity, M1 Finance, or Vanguard give you access to a universe of investments: individual stocks, ETFs, mutual funds, and more. This is where real wealth accumulation happens.

What NOT to Buy: The Wealth Killers

Before discussing what to buy with a Roth IRA, let’s eliminate the obvious mistakes:

Conservative vehicles that don’t belong: CDs, money market accounts, and savings accounts all generate minimal returns that don’t justify sitting in a tax-advantaged account. Similarly, fixed annuities offer tax deferral you already get for free with a Roth IRA, usually paired with disappointing returns.

Tax-advantaged redundancy: Municipal bonds are already tax-free at the federal level, so nesting them in a Roth IRA wastes valuable contribution space. Variable annuities are even worse—they duplicate your Roth’s tax benefits while charging steep fees that erode returns.

High-risk traps: Penny stocks promise explosive gains but typically deliver catastrophic losses. With limited annual contribution room ($6,000 for most investors, $7,000 if you’re 50 or older), losing your entire yearly allocation to speculative bets defeats the purpose of long-term retirement planning.

The Best Assets to Buy in Your Roth IRA

Dividend Stocks: Converting Investments into Paychecks

One underrated strategy is building a portfolio of dividend-paying stocks. Companies like Verizon and AT&T regularly distribute profits to shareholders, meaning you could eventually earn enough in dividends to cover expenses without touching your principal. Research using resources like the Dividend Aristocrats list—companies with decades of consistent dividend payments and annual increases—to identify reliable candidates.

The beauty of this approach in a Roth IRA is that dividend reinvestment and all capital appreciation happen tax-free. Fractional share technology from platforms like M1 Finance means you can build this strategy even with modest initial capital, assembling a diversified income-generating portfolio on your own terms.

Growth Stocks and Technology: Betting on Innovation

For investors comfortable with volatility, technology stocks deserve significant portfolio weighting. The FAANG complex—Alphabet, Apple, Amazon, Netflix, and Meta—has produced remarkable gains for early investors. These companies prioritize growth over dividends, continuously plowing profits back into research, development, and expansion.

The advantage of holding these in a Roth IRA is substantial: any gains, no matter how massive, remain completely tax-free. If you’re uncertain which specific tech stocks to pursue, look toward emerging growth sectors like artificial intelligence, cloud computing, and clean energy companies leading industry transformation.

Value Investing: Borrowing Buffett’s Playbook

Not all successful investors chase high-flying tech stocks. Warren Buffett’s strategy involves identifying undervalued companies with strong fundamentals and holding them for decades. His Berkshire Hathaway portfolio contains some of the world’s most resilient businesses.

An elegant shortcut is buying Berkshire Hathaway stock (ticker: BRK.B) directly within your Roth IRA. This single purchase grants you exposure to Buffett’s entire diversified portfolio without requiring individual security analysis or active management. You’re essentially copying a proven long-term winner’s approach.

Real Estate Exposure Without Property Management

Surprisingly, you can access real estate returns through your Roth IRA without becoming a landlord. Platforms like Fundrise pool investor capital into commercial and residential properties, managed by professionals. The advantage is clear: you capture real estate appreciation and rental income—all growing tax-free—without tenant disputes, repairs, or property taxes eating into returns.

This strategy becomes especially relevant given annual contribution limits. You might allocate a portion to real estate crowdfunding while distributing the remainder across stocks and ETFs.

Cryptocurrency: The Speculative Frontier

Digital assets represent the frontier of Roth IRA investing. Services like Bitcoin IRA and iTrust Capital facilitate cryptocurrency ownership within your retirement account, though setup procedures vary by custodian. The compelling argument: if Bitcoin, Ethereum, or other cryptocurrencies experience the growth some enthusiasts predict, capturing all those gains tax-free inside a Roth IRA is extraordinarily valuable.

The obvious caveat: cryptocurrency remains highly volatile. Before allocating retirement funds to digital assets, consult with a qualified tax professional to understand regulatory implications and risk exposure.

The Strategic Advantage of Diversification

The most sophisticated Roth IRA approach combines multiple asset classes. A balanced allocation might include dividend-paying blue-chip stocks for stability, growth-oriented tech holdings for appreciation, a value-play position mirroring Buffett’s philosophy, real estate crowdfunding for alternative exposure, and perhaps a small cryptocurrency position for upside potential.

This diversified approach lets you stay invested across market cycles while keeping volatility manageable. Platforms designed for Roth investing—including M1 Finance, Fundrise, and Bitcoin IRA—support this multi-asset strategy with user-friendly interfaces and low barriers to entry.

Final Takeaway: Your Roth IRA, Your Wealth

A Roth IRA succeeds when you stop thinking of it as an account and start viewing it as your personal wealth-building machine. The decisions you make about what to buy—whether dividend stocks, tech growth plays, value investments, real estate, or alternative assets—determine whether you’ll watch your contributions grow into substantial retirement security.

Don’t settle for bank-based mediocrity when online brokers and alternative platforms offer genuine wealth acceleration. Your opportunity to construct a personalized, high-performing portfolio while capturing tax-free growth is real. Make deliberate choices aligned with your risk tolerance and time horizon, verify your selections with a financial professional, and allow compound growth to do its extraordinary work over decades.

Remember: this is your retirement, your money, and your chance to build something extraordinary. Choose your investments wisely.

Common Questions About Roth IRA Investing

What makes a Roth IRA different from a Traditional IRA? The primary distinction centers on taxation timing. Traditional IRAs allow tax deductions upfront, but withdrawals in retirement face taxation. Roth IRAs reverse this: contributions use after-tax dollars, but all withdrawals—earnings included—remain completely tax-free if requirements are met.

Can I invest in individual company stocks within my Roth IRA? Absolutely. Most brokers permit buying and selling individual stocks inside Roth accounts. Keep in mind that individual securities carry higher risk than diversified funds, so concentration risk requires careful consideration.

What are the annual contribution limits? For 2026 and beyond, standard contribution limits apply to most investors, with higher limits for those 50 and older. These figures adjust periodically for inflation, so verify current limits directly with the IRS or your brokerage.

Are there income restrictions limiting Roth IRA contributions? Yes. Investors with incomes exceeding specific thresholds cannot contribute directly to Roth IRAs, though backdoor and mega backdoor strategies sometimes provide workarounds. Check the IRS website for income phase-out details based on your filing status.

Which institutions allow me to establish a Roth IRA? Nearly every financial institution offers Roth IRAs. Major brokers include Fidelity, Vanguard, Charles Schwab, and numerous online platforms. Compare fee structures, investment selection, and customer service when evaluating options.

Should I consult a financial advisor before building my Roth IRA portfolio? Professional guidance is valuable, particularly when structuring diversified allocations or making unconventional choices like cryptocurrency or self-directed investments. A qualified financial advisor or tax professional can help optimize your strategy relative to your circumstances.