Best IRA Investments for Long-Term Retirement Growth
What to actually invest in after opening your IRA—simple strategies that work for decades, not days.
By CashSmartGuide Editorial Team - Last updated: January 2026 | 8 min read
You opened your IRA. You funded it. Now comes the part where most people freeze: what do I actually buy? The money is sitting there in cash, earning basically nothing, and you're staring at thousands of investment options wondering where to start.
Here's the truth—investing for retirement is simpler than the financial industry wants you to think. You don't need to pick individual stocks, time the market, or watch CNBC every day. The best long-term IRA investments are boring, diversified, and require almost zero maintenance once you set them up.
This guide covers exactly what to invest in based on your age, risk tolerance, and how involved you want to be. Whether you want a single-fund solution you never touch or prefer building your own portfolio, I'll show you proven strategies that have worked for millions of retirement savers.
The Quick Answer
The best IRA investments for most people are low-cost index funds that track the total stock market (like VTSAX or FSKAX) combined with bond funds for stability. If you want something even simpler, target-date funds automatically adjust your portfolio as you age and require zero management.
For a 30-year-old, a reasonable starting portfolio is 90% stocks (total market index) and 10% bonds. For someone in their 50s, maybe 70% stocks and 30% bonds. The younger you are, the more stocks you should own because you have decades to ride out market downturns.
Why Index Funds Beat Almost Everything
Before we talk about specific investments, understand this: most actively managed funds—where someone picks stocks trying to beat the market—fail to beat simple index funds over the long run. After fees, about 90% of professional fund managers underperform index funds over 15 years.
Index funds own tiny pieces of hundreds or thousands of companies automatically. When you buy a total stock market index fund, you own a slice of the entire U.S. economy. If America grows, your investment grows. No stock picking required.
The Index Fund Advantage
• Ultra-low fees: 0.03% to 0.15% annually versus 1%+ for actively managed funds. That difference compounds to hundreds of thousands over 30 years.
• Instant diversification: Own thousands of companies with one purchase. If a few companies fail, it barely affects you.
• No guessing: You're not betting on which stocks will win. You're betting the economy will grow over decades, which historically it has.
• Tax efficient: Index funds trade less, generating fewer taxable events (especially important in taxable accounts, though less critical in IRAs).
This is why legendary investors like Warren Buffett recommend index funds for most people. Not because they're exciting—because they work. Your IRA isn't for excitement. It's for growing wealth steadily over decades while you focus on living your life.
Three Approaches: Pick Your Involvement Level
There's no single "right" way to invest your IRA. Different approaches work for different people. Choose based on how much time and energy you want to spend managing your investments.
Option 1: The Set-It-and-Forget-It Approach
Best for: People who want a single fund that handles everything automatically
Target-Date Funds (All-in-One Solution)
Target-date funds are designed for retirement investing. You pick a fund with a date close to when you'll retire, invest all your money in it, and literally never think about it again. The fund automatically adjusts from aggressive (more stocks) when you're young to conservative (more bonds) as you approach retirement.
How It Works
If you plan to retire around 2055, you buy a Target 2055 Fund. The fund starts with about 90% stocks and 10% bonds. As years pass, it gradually shifts toward more bonds (safer) and fewer stocks. By 2055, it might be 50% stocks and 50% bonds.
You don't rebalance. You don't adjust anything. You just keep adding money and the fund does everything else. This is as simple as retirement investing gets.
Specific Fund Examples
Vanguard Target Retirement Funds
Example: VFIFX (Target 2050). Expense ratio: 0.08%. Holds four Vanguard index funds covering U.S. stocks, international stocks, U.S. bonds, and international bonds.
Fidelity Freedom Index Funds
Example: FDKLX (Target 2050). Expense ratio: 0.12%. Similar to Vanguard but uses Fidelity index funds.
Schwab Target Index Funds
Example: SWYNX (Target 2050). Expense ratio: 0.08%. Uses Schwab's index funds.
Bottom Line on Target-Date Funds
If you want investing to be dead simple and you're okay with good-enough returns, target-date funds are perfect. Pick the date closest to your retirement, invest 100% of your IRA in it, set up automatic monthly contributions, and move on with your life. This approach beats 90% of people who overthink it.
Option 2: The Simple DIY Portfolio
Best for: People who want some control but still keep it simple
The Three-Fund Portfolio
This is the most popular DIY strategy in the investing community. You build your own diversified portfolio using just three index funds: U.S. stocks, international stocks, and bonds. You control the exact allocation and adjust it yourself as you age.
The Three Funds
Fund 1: Total U.S. Stock Market
Covers every publicly traded U.S. company from Apple to small startups. This is your growth engine.
• Vanguard: VTSAX (mutual fund) or VTI (ETF) - 0.04% fee
• Fidelity: FSKAX (mutual fund) - 0.015% fee
• Schwab: SWTSX (mutual fund) - 0.03% fee
Fund 2: Total International Stock Market
Covers companies in Europe, Asia, and emerging markets. Adds geographic diversification.
• Vanguard: VTIAX (mutual fund) or VXUS (ETF) - 0.11% fee
• Fidelity: FTIHX (mutual fund) - 0.06% fee
• Schwab: SWISX (mutual fund) - 0.06% fee
Fund 3: Total Bond Market
Provides stability and income. Doesn't grow as much as stocks but cushions market crashes.
• Vanguard: VBTLX (mutual fund) or BND (ETF) - 0.05% fee
• Fidelity: FXNAX (mutual fund) - 0.025% fee
• Schwab: SWAGX (mutual fund) - 0.04% fee
Sample Allocations by Age
These are guidelines, not rules. Adjust based on your comfort with risk and when you actually plan to retire.
Rebalancing
Once or twice a year, check if your allocations drifted from your target. If U.S. stocks had a great year and now represent 70% instead of 60%, sell some and buy more of what's lagging. This forces you to buy low and sell high automatically. Takes about 15 minutes annually.
Option 3: The Customized Approach
Best for: People who enjoy investing and want maximum control
Build Your Own Multi-Fund Portfolio
If you want more granular control, you can split your portfolio into more specific funds—small-cap value, REITs, emerging markets, TIPS, etc. This gives you the ability to tilt toward certain factors or sectors you believe will outperform.
Fair Warning
This approach requires more knowledge, time, and discipline. You need to understand factor investing, correlation, and rebalancing strategies. For most people, the three-fund portfolio delivers 95% of the results with 10% of the effort. Only go this route if you genuinely enjoy studying investing.
If you choose this path, focus on low-cost index funds or ETFs for each slice of your portfolio. Avoid the temptation to chase performance or add too many funds—complexity doesn't equal better returns.
What NOT to Invest In (Common Mistakes)
Equally important as knowing what to buy is knowing what to avoid. These investments sound appealing but usually hurt long-term returns.
Individual Stocks
Unless you're a professional analyst, picking individual stocks is gambling, not investing. Even if you pick Amazon or Apple, one or two winners don't make up for the losers. Index funds give you all the winners automatically without the risk of total loss from a single company bankruptcy.
Actively Managed Funds with High Fees
Funds charging 1% or more annually eat your returns alive. A 1% fee doesn't sound like much, but over 30 years it can reduce your final balance by 25% or more. Stick with index funds charging 0.03% to 0.15%. The difference is massive over time.
Cryptocurrency
Maybe you'll strike it rich with Bitcoin. Maybe it crashes to zero. Your IRA isn't the place for speculative bets. If you want to gamble on crypto, use money outside your retirement accounts. Keep your IRA boring and reliable.
Sector Funds (Unless You Know What You're Doing)
Funds that only invest in technology, healthcare, or energy are too concentrated. If that sector tanks, your retirement takes a huge hit. Total market funds spread risk across all sectors automatically. Let the market decide which sectors thrive instead of betting on one.
Annuities Inside an IRA
Annuities have high fees and surrender charges. They provide tax deferral, which is pointless inside an IRA that's already tax-advantaged. Salespeople push these because they earn huge commissions. Just say no.
Leaving Money in Cash
This is the most common mistake. Your money sits in a settlement fund earning 0.5% while inflation runs 3%. You're losing purchasing power every year. Cash is for emergency funds, not retirement accounts. Invest it.
Your Investing Strategy by Age
Your age matters because it determines how much risk you can afford to take. The longer your timeline, the more aggressive you can be because you have decades to recover from market crashes.
In Your 20s and 30s: Maximum Growth
You have 30-40 years until retirement. Go heavy on stocks—90% to 100% is reasonable. Market crashes will happen. That's fine. You're not touching this money for decades. Crashes are buying opportunities when you're young.
Simple portfolio:
90% total stock market index, 10% bonds. Or just pick a target-date fund 30-40 years out.
In Your 40s: Still Growing, Adding Stability
You still have 20-25 years before retirement. Keep most money in stocks but start adding bonds for cushion. Market volatility matters more now because you're closer to needing this money.
Simple portfolio:
70-80% stocks, 20-30% bonds. Rebalance annually.
In Your 50s: Protecting What You've Built
Retirement is 10-15 years away. You can't afford a major crash right before you retire. Shift toward more bonds and less stocks. You still need growth, but preservation becomes equally important.
Simple portfolio:
60% stocks, 40% bonds. Check your allocation every six months.
In Your 60s and Beyond: Capital Preservation
You're retiring soon or already retired. You need stability and income. A 40% market crash could devastate your plans if you're too stock-heavy. Shift toward bonds but keep some stocks for inflation protection.
Simple portfolio:
40-50% stocks, 50-60% bonds. Consider adding some cash for near-term expenses.
Practical Tips for Long-Term Success
Automate Everything
Set up automatic monthly contributions from your bank to your IRA. Set up automatic investment of new deposits into your chosen funds. Remove human emotion from the process. Automation is the difference between good intentions and actual wealth building.
Ignore Short-Term Performance
Your portfolio will drop 20%, 30%, even 40% during crashes. This is normal. Stocks crashed 50% in 2008 and recovered completely within a few years. People who panic-sold locked in losses. People who stayed invested got rich. Think in decades, not days.
Keep Costs Ultra-Low
Every dollar you pay in fees is a dollar not compounding for 30 years. The difference between a 0.05% fee and a 1% fee is literally hundreds of thousands of dollars over a career. Always check expense ratios before buying a fund. Under 0.20% is good. Under 0.10% is great.
Don't Try to Time the Market
Nobody can predict crashes or rallies consistently. Waiting for the "right time" to invest means missing years of growth. Just invest whatever you can, whenever you can. Time in the market beats timing the market every single time.
Increase Contributions When You Get Raises
Got a 3% raise? Immediately increase your IRA contribution by 1-2%. You won't miss the money because your paycheck still went up, but your retirement savings accelerate dramatically. This one habit can double or triple your final retirement balance.
Common Questions
Should I invest my IRA in mutual funds or ETFs?
Both work fine. Mutual funds are slightly easier for automatic investing and fractional shares. ETFs trade like stocks and sometimes have slightly lower fees. For most people in an IRA, mutual funds are more convenient. The difference in returns is negligible.
How often should I check my IRA balance?
Quarterly at most. Monthly or weekly checking leads to emotional decisions. Your balance will fluctuate wildly—this is normal. Set a calendar reminder to review four times a year, rebalance if needed, and forget about it otherwise.
Is it too late to start investing in my 40s or 50s?
Absolutely not. A 45-year-old investing $500 monthly until 65 at 8% returns accumulates over $280,000. Starting late means you need to save more aggressively, but 15-20 years of compound growth still builds substantial wealth. The best time to start was yesterday. The second best time is today.
Should I invest my Roth and traditional IRA differently?
Not really. Both should follow the same basic strategy based on your age and risk tolerance. Some advanced investors put high-growth investments in Roth (since gains are tax-free) and bonds in traditional (since income is taxed anyway). But for most people, identical allocations in both accounts work perfectly fine.
Can I invest in real estate with my IRA?
Technically yes through a self-directed IRA, but it's complicated, expensive, and usually not worth it. The rules are strict, fees are high, and you can't personally use the property. For most people, REITs (real estate investment trusts) inside a regular IRA provide real estate exposure without the headaches.
What if I want more risk for higher returns?
You can tilt toward small-cap value stocks or emerging markets—historically these have higher returns but much more volatility. Or you could stay 100% stocks even as you age instead of adding bonds. Just understand: more risk means bigger crashes hurt more. Only take risk you can stomach during 40% downturns.
The Bottom Line
The best IRA investments aren't sexy or complicated. They're low-cost index funds that own the entire market, automatically diversified, requiring almost zero time or expertise to manage.
If you want simple: buy a target-date fund matching your retirement year. If you want slightly more control: build a three-fund portfolio with total market stocks, international stocks, and bonds. Adjust the mix based on your age, rebalance once or twice a year, and let compound growth do the heavy lifting.
The investment industry wants you to think retirement investing requires constant trading, active management, and expensive advisors. It doesn't. Boring index funds, consistent contributions, and patience beat 90% of sophisticated strategies over the long run.
Stop overthinking this. Pick one of the strategies above, invest your money today, automate monthly contributions, and get back to living your life. Check in quarterly, rebalance annually, and trust that decades of compounding will turn your modest contributions into serious wealth.
Related: Learn More About IRAs
Investment Disclaimer
This article provides general educational information about IRA investment strategies and should not be considered personalized investment advice. Past performance does not guarantee future results. All investments carry risk, including potential loss of principal. Individual circumstances vary based on age, income, risk tolerance, and financial goals. Before making investment decisions, consider consulting with qualified financial advisors who can analyze your specific situation. Specific fund recommendations mentioned are for educational purposes and do not constitute endorsements. Always research investment options thoroughly and understand fees before investing.