Don’t let 2025’s market volatility and tariff headlines distract you from checking off the essentials on your personal finance to-do list. One key date to circle: April 15 — the final deadline to make contributions to a Roth IRA for the 2024 tax year.
A Roth IRA is one of the few tax-advantaged accounts that offers long-term benefits with fewer restrictions than a 401(k) or a health savings account.
For example, you can withdraw your contributions at any time without penalty. And once you are age 59½ or older and have held the account for at least five years, you can take out both contributions and earnings tax-free. This makes it a potent account for generating passive income in retirement.
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But Roth IRA contribution room is limited, so it’s important to plan ahead and budget wisely. For the 2024 and 2025 tax years, you can contribute up to $7,000, or $8,000 if you’re 50 or older thanks to the catch-up provision that permits an additional $1,000 contribution.
However, personal contribution limits ultimately depend on your modified adjusted gross income. For the 2024 tax year, you must earn under $146,000 as a single filer or $230,000 if married filing jointly to make the full contribution. In 2025, those limits rise to $150,000 and $236,000, respectively. Investors earning above those thresholds will see their allowed contributions reduced or phased out entirely.
Because Roth IRAs don’t allow you to claim tax losses on poor investments and offer limited contribution room, investors need to be strategic. This isn’t the place to stash idle cash or chase speculative trades.
“Generally, investors should allocate funds that are less tax-efficient in a Roth IRA,” says Lauren Wybar, a wealth advisor at Vanguard. “Taxable bonds, real estate investment trusts and actively managed stock funds tend to generate more income and capital gains, which are better sheltered in a Roth.”
Here are seven of the best mutual funds and exchange-traded funds, or ETFs, to hold in a Roth IRA:
| Fund | Expense ratio |
| Vanguard Wellington Fund Investor Shares (ticker: VWELX) | 0.25% |
| Vanguard Wellesley Income Fund Investor Shares (VWINX) | 0.23% |
| Amplify CWP Enhanced Dividend Income ETF (DIVO) | 0.56% |
| Simplify Volatility Premium ETF (SVOL) | 0.72% |
| Vanguard Small-Cap Value Index Fund Admiral Shares (VSIAX) | 0.07% |
| Schwab U.S. Broad Market ETF (SCHB) | 0.03% |
| Fidelity Wise Origin Bitcoin Fund (FBTC) | 0.25% |
Vanguard Wellington Fund Investor Shares (VWELX)
Actively managed mutual funds tend to distribute short- and long-term capital gains at year-end due to higher portfolio turnover. VWELX is a classic example, typically issuing capital gains distributions in December in addition to its regular quarterly payouts. It currently offers a 2.3% 30-day SEC yield. If you want to compound this Vanguard fund as efficiently as possible, consider holding it in a Roth IRA.
VWELX is a time-tested long-term holding. This fund was launched in 1929 and owns a balanced portfolio of roughly two-thirds quality dividend-paying value stocks and one-third investment-grade bonds. That mix has helped it weather market shocks like the Great Depression, the dot-com bust and the 2008 financial crisis, delivering a solid 8.3% annualized total return since inception.
Vanguard Wellesley Income Fund Investor Shares (VWINX)
“Roth IRAs are an attractive financial savings vehicle because investors can contribute to them regardless of age and take advantage of tax-free income in retirement, with no required minimum distribution (RMD), unlike a traditional IRA, which requires distributions at age 73,” says Tiana Patillo, a financial advisor manager at Vanguard. Investors using a Roth IRA for distributions may prefer VWINX.
VWINX is the more conservative counterpart to VWELX, with a portfolio mix of one-third stocks and two-thirds bonds, guided by the same active management philosophy. It offers a 3.9% 30-day SEC yield and has delivered a 9.2% annualized return since its 1970 inception. It is one of the more affordable active funds, with a reasonable 0.23% expense ratio, but it requires a $3,000 minimum investment.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
“Given a Roth IRA has no RMD rule, this is usually the last type of retirement account to take distributions compared to traditional IRAs and taxable brokerage accounts,” says Brandon M. Clark, director of financial planning at the Clark Group Asset Management. “In addition, this account is usually the most advantageous for beneficiaries because they inherit the funds tax-free as well.”
In a single ticker, DIVO offers exposure to 20 to 25 blue-chip dividend growth stocks screened for earnings quality, cash flow and return on equity. The ETF also opportunistically sells covered calls on individual holdings, a strategy that caps upside but generates income. This results in a 4.9% distribution rate, enough to support the commonly cited 4% safe withdrawal rate.
Simplify Volatility Premium ETF (SVOL)
“SVOL primarily seeks to capture volatility risk premiums through a short VIX futures strategy while incorporating hedges to mitigate extreme market swings,” says Jeff Schwarte, chief equity strategist at Simplify. The ETF’s exposure generally corresponds to one-fifth to three-tenths (-0.2x to -0.3x) the inverse of the VIX short-term futures index. When expected market volatility falls, SVOL benefits.
“Since Roth IRAs can offer tax-free growth and withdrawals, SVOL’s high-yield monthly distributions and potential for capital appreciation can be fully realized without incurring additional tax burdens, making it an attractive choice for long-term, tax-advantaged investing,” Schwarte explains. Right now, the ETF is currently paying a high 15.7% distribution yield. SVOL charges a 0.72% expense ratio.
[READ: 7 Best Long-Term ETFs to Buy and Hold]
Vanguard Small-Cap Value Index Fund Admiral Shares (VSIAX)
“Roth IRAs are especially beneficial for younger investors because there is greater saving potential due to that tax-free compounding,” Patillo says. One way to enhance long-term growth beyond broad market index funds is through a factor investing approach. This can include overweighting smaller, undervalued stocks that historically have offered higher return potential over time.
A low-cost Vanguard option for this strategy is VSIAX, which tracks the CRSP U.S. Small Cap Value Index. Unlike some actively managed factor funds, it charges just 0.07%, reducing performance drag from fees. It can be an excellent complement to portfolios already tilted toward large-cap growth stocks. However, it requires a $3,000 minimum investment, typical of most Vanguard “Admiral Shares” class funds.
Schwab U.S. Broad Market ETF (SCHB)
“We typically recommend owning mostly growth-oriented investments, like stocks, to maximize the return potential over time,” Clark explains. “Of course, everyone’s risk tolerance and goals are different, but broad-based ETFs can be a good option for maximizing a Roth IRA’s growth long term.” A great example is SCHB, which tracks the Dow Jones U.S. Broad Stock Market Index.
By tracking this benchmark, SCHB provides exposure to roughly 2,500 small-, mid- and large-cap U.S. stocks, though the index is market-cap-weighted, meaning the largest blue chips dominate the portfolio. All of this comes with a low 0.03% expense ratio and no minimum required investment beyond the price of one share, currently around $19.50, or lower if your brokerage offers fractional shares.
Fidelity Wise Origin Bitcoin Fund (FBTC)
“Acting as a tax-free piggy bank, Americans can use Roth IRAs to invest in high-growth assets while maximizing their tax savings in the future,” says Chris Kline, chief operating officer and co-founder of Bitcoin IRA. “It’s one of the reasons Bitcoin — whether via ETFs or direct custody in self-directed IRAs — is becoming a popular choice to diversify within retirement accounts.”
Many options exist for spot Bitcoin ETFs, but FBTC is a popular choice, with over $16 billion in assets under management and a reasonable 0.25% expense ratio. Unlike some competing spot Bitcoin ETFs, FBTC holds its underlying reserves directly with Fidelity instead of using Coinbase Global Inc. (COIN) as custodian. The ETF is easily traded thanks to a liquid 0.07% 30-day median bid-ask spread.
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7 Best Funds to Hold in a Roth IRA originally appeared on usnews.com
Update 04/07/25: This story was previously published at an earlier date and has been updated with new information.
