What is the Safest Investment for an IRA?

What is the safest investment for an IRA

Investing for the long term means stock investments should constitute most of your IRA portfolio. But make sure your asset mix includes bonds and other forms of income investment as well.

IRAs are tax-efficient investment accounts that offer tax breaks when withdrawing funds in retirement. You have the choice between traditional and Roth IRAs for this type of account.


Stocks (also referred to as equities) represent partial ownership in publicly traded companies and investing in them can yield high returns depending on your risk tolerance and goals for investing.

Growth stocks are companies exhibiting faster earnings and revenue growth than their industry or market average, typically providing small dividends but often increasing in value more rapidly – giving your portfolio an extra boost!

Preferred stocks, which pay shareholders a fixed dividend and take precedence over common shareholders in liquidations proceedings, are an attractive low-risk investment choice that can provide steady returns while protecting retirement savings. Preferred shares provide steady returns that could provide steady retirement savings returns.


Bonds, which act like loans issued to an issuer that must be repaid at the end of their terms, are considered an attractive form of investing because their values don’t fluctuate as drastically. By diversifying your portfolio with bonds, you can reduce overall risk.

Bonds allow investors to lend money directly to governments or companies in return for periodic interest payments (typically twice annually) until the bond matures. Investors can purchase individual bonds as well as bond funds such as Treasury bills and notes, municipals, TIPS or corporates.

All bonds carry some risk, especially that of not making timely interest and principal payments on time, as well as interest rate fluctuations and inflation risks.

Money Markets

Money markets are an integral component of modern economies, providing savers an avenue for earning interest on excess funds while lending it out to businesses and governments in need of short-term funds. Furthermore, they influence long-term capital markets through which savers gain access.

Investors can invest their cash in Treasury bills, certificates of deposit (CDs), commercial paper and repurchase agreements through money market mutual funds – which usually offer fixed net asset values of $1 per share.

Money market accounts resemble savings accounts in that they provide limited withdrawals and often boast higher interest rates than traditional accounts. It’s important to carefully review federal regulations and account restrictions; for instance, some banks require minimum balance requirements or will charge fees if more than six withdrawals take place within any month.

Short-Term Investments

If you’re seeking higher returns than bonds and stocks can provide, short-term investments such as bond mutual funds or exchange-traded funds (ETFs), as well as alternative investments like real estate or peer to peer lending may offer greater potential for success.

Remind yourself that longer investment duration doesn’t necessarily translate to lower risk; short term investments can actually be quite risky.

Investors looking for an advanced and fully integrated financial app that will manage their traditional, Roth, SEP or SIMPLE IRA and invest in various assets should consider SoFi Invest as it also provides educational resources that can aid with saving for retirement and planning for it. Other options are Betterment and M1 Finance which both have low advisory fees.

Long-Term Investments

Long-term investments should be held for an extended period, and can provide a higher rate of return than shorter-term assets due to compound interest. You can select from various investments including stocks, funds and bonds.

An IRA target retirement fund provides an automatic rebalancing and increasingly conservative approach as your retirement date approaches. You could also customize your portfolio through an online brokerage or robo-advisor where you can select individual stocks and funds for customization.

NerdWallet’s ratings take into account factors like account fees and minimums, investment options, mobile app capabilities and customer support when rating online brokers and robo-advisors. Read our reviews to quickly locate IRA providers suited for your specific needs; then compare offers between providers to determine the one most suited to you.

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