What Makes a Good Roth IRA Investment?
A Roth IRA is a tax wrapper — not an investment itself. What you put inside it matters enormously. The best Roth IRA investments share three characteristics: high expected long-term returns (to maximize the tax-free benefit), low costs (to keep more of those returns), and broad diversification (to reduce risk over decades).
This makes low-cost index funds the ideal Roth IRA investment for most people. Here are the best options for 2026.
Best Overall: Total Market Index Fund
A U.S. Total Market index fund inside a Roth IRA is an incredibly powerful combination. You get exposure to the entire U.S. economy — all 3,500+ publicly traded companies — with zero taxes on decades of compound growth.
- At Fidelity: FZROX (0.00%) — the best cost option
- At Vanguard: VTSAX (0.04%) or VTI (0.03%)
- At Schwab: SWTSX (0.03%) or SCHB (0.03%)
Best S&P 500 Option
If you prefer tracking the most widely recognized benchmark, an S&P 500 fund inside a Roth IRA is outstanding.
- FXAIX (Fidelity, 0.015%)
- VOO (Vanguard, 0.03%)
- IVV (iShares, 0.03%)
Best Two-Fund Roth IRA Portfolio
For complete global diversification, combine a U.S. fund with an international fund:
- 80% FZROX + 20% FZILX (at Fidelity, total cost: 0.00%)
- 80% VTI + 20% VXUS (at Vanguard, total cost: ~0.04%)
Why not bonds in a Roth IRA? Bonds produce lower long-term returns than stocks. Since a Roth IRA gives you tax-free growth, you want the highest-returning assets inside it to maximize the tax benefit. Keep bonds in tax-deferred accounts (Traditional IRA or 401k) where their lower returns are sheltered from annual income tax. This strategy is called "asset location."
What to Avoid in a Roth IRA
- High-fee actively managed funds: Paying 1%+ in fees inside a Roth IRA dramatically erodes the tax-free benefit
- Money market funds or CDs: Too conservative for a long-term growth account — you're wasting the tax-free growth potential
- Speculative investments: While the tax-free growth is appealing, the risk of permanent loss in a Roth IRA is severe — you can't deduct losses
Disclaimer: For educational purposes only. Not financial or tax advice. Consult a licensed financial advisor for personalized Roth IRA guidance.