Where do I invest my Roth IRA besides stock market and mutual funds?
"That depends, really. Generally speaking, though - Roth IRAs are THE PLACE for Stock-Market/Mutual-Fund investing. All the off the wall (or, not so off the wall) things like Real Estate investments, or buying up gold, or whatever other ideas you hear from people - they may be good or bad or whatnot. But your Roth IRA is maybe not the best place for that sort of thing.  The whole philosophy behind IRAs is to deliberately set aside money for the future. Anything reasonable will work for this. Explore interesting investment ideas with today's money, not tomorrow's money. That being said - at your age I would go for the riskier options within what's available.  If I were in your situation (and I have been, recently), I would lean toward low-fee mutual funds classified as ""Growth"" funds.  My own personal opinion (THIS IS NOT ADVICE) is that Small Cap International funds are the place to be for young folks. That's a generalized opinion based on my feel for the world, but I don't think I'm personally competent to start making specific stock picks. So, mutual funds makes sense to me in that I can select the fund that generally aligns with my sense of things, and assume that their managers will make reasonably sound decisions within that framework. Of course that assumption has to be backed up with reputation of the specific MF company and the comparative performance of the fund relative to other funds in the same sector. As to the generalized question (how else can you work toward financial stability and independence), outside of your Roth IRA: find ways to boost your earning potential over time, and buy a house before the next bubble (within the next 18 months, I'm GUESSING)." Nowhere. To back up a bit, mutual funds are the stock market (and the bond market). That is, when you invest in a mutual fund, your money is ultimately buying stocks on the open market. Some of it might be buying bonds. The exact mix of stocks and bonds depends on the mutual fund. But a mutual fund is just a basket of stocks and/or bonds (and/or other, more exotic investments). At 25, you probably should just be investing your Roth IRA in index stock mutual funds and index bond mutual funds. You probably shouldn't even be doing peer-to-peer lending (unless you're willing to think of any losses as the cost of a hobby); the higher interest rate you're getting is a reflection of the risk that your borrowers will default. I'm not even sure if peer-to-peer lending is allowed in Roth IRA's.  Investing in just stocks, bonds, and cast is boring, but these are easy investments to understand. The harder the investment is to understand, the easier it is for it to be a scam (or just a bad investment). There's not necessarily anything wrong with boring. In general, investors with a long period of time until they would need to withdraw the cash are best off holding mostly equities.  While the dividends that equities would return are less than the interest you would get in peer-to-peer lending, over long periods of time not only do you get the dividends from equity investment but the value of the stock will grow faster than  interest on loans. The higher returns from stocks, however, comes with more risk of big downturns.  Many people pull their investments out of stocks right after crashes which really hurts their long term returns.  So, in order to get the benefit of investing in stocks you need to be strong enough to continue to hold the stocks through the crash and into the recovery. As for which stocks to invest in, generally it is best to invest in low-fee index funds/etfs where you own a broad collection of stocks so that if (when) any one stock goes bust that your portfolio does not take much damage.  Try to own both international and domestic stocks to get good diversification.  The consensus recommends adding just a little bit of REITs and bonds to your investments, but for someone at 25 it might not be worth it yet. Warren Buffett had some good thoughts on index investing. Many investment companies are also offering target retirement date portfolios to invest in.  They manage reducing the risk over time so you don't have to worry about it if you choose not to. You're technically 'allowed' to do other investments with your Roth, but you get taken to the cleaners by the financial 'services' community who wants to take a slice.  Non-securities investments from a Roth typically require a 'custodian' or other intermediary to handle your investment, e.g. buying silver coins and paying someone else to hold them. Buy these with cash and hold them yourself, assuming you trust yourself more than some stranger.
"You could put in in a Money Market Fund. These are designed to always be $1 per share, and not lose money. Of course, it still, very rarely, happens and is called ""breaking the buck"" when they do.  Sounds like the high yield savings is the way to go. The rates will be the same as what you can get from a Money Market Fund, but you also have the added advantage that the account is FDIC insured. BTW, using a Roth as an emergency fund is a terrible idea. It is true that, since you already paid taxes on your contributions, you can withdraw those contributions without incurring penalties. However, you have to file paperwork to do it, and since it's not common, the IRA custodian is likely to screw it up. Plus, you have to keep track of what were contributions, and what was investment returns, to not run afoul of the penalties. And it will take time to do it, which you may not have in an emergency. Considering you're only looking at getting 1% interest anyway, there's no reason to use a Roth account as an emergency fund. You can set those same automatic deposits into a savings account." "Retirement accounts often can be invested with pretax money, with the exception of Roth accounts that use post-tax and have tax-free growth if you follow the rules, rather than after tax money as well as provide a shelter so that you aren't having to pay annual taxes on dividends and other possible distributions. Another point would be to consider how much money you'd be investing as some funds may have institutional versions that can be much cheaper than others, e.g. compare Vanguard's index funds that the 500 Index in Investor shares, Admiral shares and institutional forms where the tickers would be VFINX, VFIAX, VINIX, VIIIX to consider. Some companies may have access to the institutional funds that aren't what you'd have unless you are investing millions of dollars upfront. Lastly, if there isn't an employer plan and you make a ton of cash, you may not qualify for a deductible IRA or Roth IRA contribution for something else that may happen if you want to start playing with, ""What if.""" I would open a taxable account with the same custodian that manages your Roth IRA (e.g., Vanguard, Fidelity, etc.). Then within the taxable account I would invest the extra money in low cost, broad market index funds that are tax efficient. Unlike in your 401(k) and Roth IRA, you will now have tax implications if your funds produce dividends or realize a capital gain. That is why tax-efficient funds are important to minimize this as much as possible.  The 3-fund portfolio is a popular choice for taxable accounts because of simplicity and the tax efficiency of broad market index funds that are part of the three fund portfolio. The 3-fund portfolio normally consists of Depending on your tax bracket you may want to consider municipal bonds in your taxable instead of taxable bonds if your tax bracket is 25% or higher.  Another option is to forgo bonds altogether in the taxable account and just hold bonds in retirement accounts while keeping tax efficient domestic and international tock funds in your taxable account. Then adjust the bond portion upward in your retirement accounts to account for the additional stocks in your taxable accounts. This will maintain the asset allocation that you've already chosen that is appropriate for your age and goals. Your approach sounds solid to me.  Alternatively, if (as appears to be the case) then you might want to consider devoting your tax-advantaged accounts to tax-inefficient investments, such as REITs and high-yield bond funds.  That way your investments that generate non-capital-gain (i.e. tax-expensive) income are safe from the IRS until retirement (or forever).  And your investments that generate only capital gains income are safe until you sell them (and then they're tax-cheap anyway). Of course, since there aren't really that many tax-expensive investment vehicles (especially not for a young person), you may still have room in your retirement accounts after allocating all the money you feel comfortable putting into REITs and junk bonds.  In that case, the article I linked above ranks investment types by tax-efficiency so you can figure out the next best thing to put into your IRA, then the next, etc. Don't try individual stocks. If you have a job, any job, even one from mowing lawns, you can open a Roth IRA. If you are under 18 you will need your parents/guardian to setting up the account. You can put the an amount equal to your earned income into the Roth IRA, up to the annual maximum of $5500. There are advantages to a Roth IRA:  What happens if you are using your income to pay for your car, insurance, etc? You can get the money from your parents, grandparents. The only rule is that you can't invest more than you have earned. Act before Tax day (April 15th). You know what you made last year. If you open the account and make the contribution before April 15th it can count for last year, as long as you are clear with the broker/bank when you make the deposit. You could use a stock-only ISA and invest in Exchange Traded Funds (ETFs). ETFs are managed mutual funds that trade on open exchanges in the same manner as stocks. This changes the specific fund options you have open to you, but there are so many ETFs at this point that any sector you want to invest in is almost certainly represented. "Whoa. These things are on two dimensions.  It's like burger and fries, you can also have chicken sandwich and fries, or burger and onion rings.   You can invest in an taxable brokerage account and/or an IRA.  And then, within each of those...  You can buy index funds and/or anything else. All 4 combinations are possible.  If someone says otherwise, take your money and run.  They are a shady financial ""advisor"" who is ripping you off by steering you only into products where they get a commission. Those products are more expensive because the commission comes out of your end.  Not to mention any names.  E.J.    If you want financial advice that is honest, find a financial advisor who you pay for his advice, and who doesn't sell products at all.  Or, just ask here.  But I would start by listening to Suze Orman, Dave Ramsey, whomever you prefer.  And read John Bogle's book.   They can tell you all about the difference between money market, bonds, stocks, managed mutual funds (ripoff!) and index funds. IRA accounts, Roth IRA accounts and taxable accounts are all brokerage accounts.  Within them, you can buy any security you want, including index funds.  The difference is taxation.  Suppose you earn $1000 and choose to invest it however  Later you withdraw it and it has grown to $3000.  Investing in a taxable account, you pay normal income tax on the $1000. When you later withdraw the $3000, you pay a tax on $2000 of income.  If you invested more than a year, it is taxed at a much lower ""capital gains"" tax rate.  With a traditional IRA account, you pay zero taxes on the initial $1000.  Later, when you take the money out, you pay normal income tax on the full $3000.  If you withdrew it before age 59-1/2, you also pay a 10% penalty ($300).  With a Roth IRA account, you pay normal income tax on the $1000.  When you withdraw the $3000 later, you pay NOTHING in taxes.  Provided you followed the rules.   You can invest in almost anything inside these accounts: Money market funds. Terrible return.  You won't keep up with the market.  Bonds.  Low return but usually quite safe.  Individual stocks.  Good luck.   Managed mutual funds.  You're paying some genius stock picker to select high performing stocks. He has a huge staff of researchers and  good social connections.  He also charges you 1.5% per year overhead as an ""expense ratio"", which is a total loss to you.  The fact is, he can usually pick stocks better than a monkey throwing darts.  But he's not 1.5% better!  Index funds.  These just shrug and buy every stock on the market.  There's no huge staff or genius manager, just some intern making small adjustments every week.  As such, the expense ratio is extremely small, like 0.1%.    If any of these investments pay dividends, you must pay taxes on them when they're issued, if you're not in an IRA account.  This problem gets fixed in ETF's.  Index ETF's.  These are index funds packaged to behave like stocks.  Dividends increase your stock's value instead of being paid out to you, which simplifies your taxes.  If you buy index funds outside of an IRA, use these.  Too many other options to get into here." "Your are mixing multiple questions with assertions which may or may not be true. So I'll take a stab at this, comment if it doesn't make sense to you. To answer the question in the title, you invest in an IRA because you want to save money to allow you to retire. The government provides you with tax incentives that make an IRA an excellent vehicle to do this. The rules regarding IRA tax treatment provide disincentives, through tax penalties, for withdrawing money before retirement. This topic is covered dozens of times, so search around for more detail. Regarding your desire to invest in items with high ""intrinsic"" value, I would argue that gold and silver are not good vehicles for doing this. Intrinsic value doesn't mean what you want it to mean in this context -- gold and silver are commodities, whose prices fluctuate dramatically.  If you want to grow money for retirement over a long period, of time, you should be invested in diversified collection of investments, and precious metals should be a relatively small part of your portfolio." "You are overthinking it. Yes there is overlap between them, and you want to understand how much overlap there is so you don't end up with a concentration in one area when you were trying to avoid it. Pick two, put your money in those two; and then put your new money into those two until you want to expand into other funds. The advantage of having the money in an IRA held by a single fund family, is that moving some or all of the money from one Mutual fund/ETF to another is painless. The fact it is a retirement account means that selling a fund to move the money doesn't trigger taxes. The fact that you have about $10,000 for the IRA means that hopefully you have decades left before you need the money and that this $10,00 is just the start. You are not committed to these investment choices. With periodic re-balancing the allocations you make now will be adjusted over the decades. One potential issue. You said: ""I'm saving right not but haven't actually opened the account."" I take it to mean that you have money in a Roth TRA account but it isn't invested into a stock fund, or that you have the money ready to go in a regular bank account and will be making a 2015 contribution into the actual IRA before tax day this year, and the 2016 contribution either at the same time or soon after. If it is the second case make sure you get the money for 2015 into the IRA before the deadline." Most people carry a diversity of stock, bond, and commodities in their portfolio.  The ratio and types of these investments should be based on your goals and risk tolerance.  I personally choose to manage mine through mutual funds which combine the three, but ETFs are also becoming popular. As for where you keep your portfolio, it depends on what you're investing for.  If you're investing for retirement you are definitely best to keep as much of your investment as possible in 401k or IRAs (preferably Roth IRAs).  Many advisers suggest contributing as much to your 401k as your company matches, then the rest to IRA, and if you over contribute for the IRA back to the 401k.  You may choose to skip the 401k if you are not comfortable with the choices your company offers in it (such as only investing in company stock). If you are investing for a point closer than retirement and you still want the risk (and reward potential) of stock I would suggest investing in low tax mutual funds, or eating the tax and investing in regular mutual funds.  If you are going to take money out before retirement the penalties of a 401k or IRA make it not worth doing. Technically a savings account isn't investing, but rather a place to store money. "Couple of clarifications to start off: Index funds and ETF's are essentially the same investments.  ETF's allow you to trade during the day but also make you reinvest your dividends manually instead of doing it for you.  Compare VTI and VTSAX, for example.  Basically the same returns with very slight differences in how they are run.  Because they are so similar it doesn't matter which you choose. Either index funds and ETF's can be purchased through a regular taxable brokerage account or through an IRA or Roth IRA.  The decision of what fund to use and whether to use a brokerage or IRA are separate. Whole market index funds will get you exposure to US equity but consider also diversifying into international equity, bonds, real estate (REITS), and emerging markets.  Any broker can give you advice on that score or you can get free advice from, for example, Future Advisor.  Now the advice: For most people in your situation, you current tax rate is currently very low.  This makes a Roth IRA a very reasonable idea.  You can contribute $5,500 for 2015 if you do it before April 15 and you can contribute $5,500 for 2016.  Repeat each year.  You won't be able to get all your money into a Roth, but anything you can do now will save you money on taxes in the long run.  You put after-tax money in a Roth IRA and then you don't pay taxes on it or the gains when you take it out. You can use Roth IRA funds for college, for a first home, or for retirement. A traditional IRA is not recommended in your case.  That would save you money on taxes this year, when presumably your taxes are already low. Since you won't be able to put all your money in the IRA, you can put the rest in a regular taxable brokerage account (if you don't just want to put it in a savings account).  You can buy the same types of things as you have in your IRA.   Note that if your stocks (in your regular brokerage account) go up over the course of a year and your income is low enough to be in the 10 or 15% tax bracket and you have held the stock for at least a year, you should sell before the end of the year to lock in your gains and pay taxes on them at the capital gains rate of 0%. This will prevent you from paying a higher rate on those gains later.  Conversely, if you lose money in a year, don't sell. You can sell and lock in losses during years when your taxes are high (presumably, after college) to reduce your tax burden in those years (this is called ""tax loss harvesting""). Sounds like crazy contortions but the name of the game is (legally) avoiding taxes.  This is at least as important to your overall wealth as the decision of which funds to buy. Ok now the financial advisor.  It's up to you.  You can make your own financial decisions and save the money but it requires you putting in the effort to be educated.  For many of us, this education is fun.  Also consider that if you use a regular broker, like Fidelity, you can call up and they have people who (for free) will give you advice very similar to what you will get from the advisor you referred to.  High priced financial advisors make more sense when you have a lot of money and complicated finances.  Based on your question, you don't strike me as having those.  To me, 1% sounds like a lot to pay for a simple situation like yours." I know of no way to answer your question without 'spamming' a particular investment.  First off, if you are a USA citizen, max out your 401-K. Whatever your employer matches will be an immediate boost to your investment.  Secondly, you want your our gains to be tax deferred. A 401-K is tax deferred as well as a traditional IRA.  Thirdly, you probably want the safety of diversification. You achieve this by buying an ETF (or mutual fund) that then buys individual stocks.  Now for the recommendation that may be called spamming by others : As REITs pass the tax liability on to you, and as an IRA is tax deferred, you can get stellar returns by buying a mREIT ETF.  To get you started here are five: mREITs  Lastly, avoid commissions by having your dividends automatically reinvested by using that feature at Scottrade. You will have to pay commissions on new purchases but your purchases from your dividend Reinvestment will be commission free.  Edit: Taking my own advice I just entered orders to liquidate some positions so I would have the $ on hand to buy into MORL and get some of that sweet 29% dividend return. The easiest way to deal with risks for individual stocks is to diversify. I do most of my investing in broad market index funds, particularly the S&P 500.  I don't generally hold individual stocks long, but I do buy options when I think there are price moves that aren't supported by the fundamentals of a stock. All of this riskier short-term investing is done in my Roth IRA, because I want to maximize the profits in the account that won't ever be taxed. I wouldn't want a particularly fruitful investing year to bite me with short term capital gains on my income tax. I usually beat the market in that account, but not by much. It would be pretty easy to wipe out those gains on a particularly bad year if I was investing in the actual stocks and not just using options. Many people who deal in individual stocks hedge with put options, but this is only cost effective at strike prices that represent losses of 20% or more and it eats away the gains. Other people or try to add to their gains by selling covered call options figuring that they're happy to sell with a large upward move, but if that upward move doesn't happen you still get the gains from the options you've sold. Now today all small and big business depends on the internet. So businessman should be those business lists in the multiple online directories. In the USA maximum user buy product through the web. If you have a business, then you can list your business globaltradeconnect's Business directory online. Where you can get more customer, product information, business location and direction. It's awesome to list a business on other online website like Google, Facebook, Bing. EDIT: After reading one of the comments on the original question, I realized that there is a much more intuitive way to think about this. If you look at it as a standard PV calculation and hold each of the cashflows constant. Really what's happening is that because of inflation the discount rate isn't the full value of the interest rate. Really the discount rate is only the portion of the interest rate above the inflation rate. Hence in the standard perpetuity PV equation PV = A / r r becomes the interest rate less the inflation rate which gives you PV = A / (i - g). That seems like a much better way to get to the answer than all the machinations I was originally trying. Original Answer: I think I finally figured this out. The general term for this type of system in which the payments increase over time is a gradient series annuity. In this specific example since the payment is increasing by a percentage each period (not a constant rate) this would be considered a geometric gradient series. According to this link the formula for the present value of a geometric gradient series of payments is: Where P is the present value of this series of cashflows.   A_1 is the initial payment for period 1 (i.e. the amount you want to withdraw adjusted for inflation).   g is the gradient or growth rate of the periodic payment (in this case this is the inflation rate)   i is the interest rate   n is the number of payments This is almost exactly what I was looking for in my original question. The only problem is this is for a fixed amount of time (i.e. n periods). In order to figure out the formula for a perpetuity we need to find the limit of the right side of this equation as the number of periods (n) approaches infinity. Luckily in this equation n is already well isolated to a single term: (1 + g)^n/(1 + i)^-n}. And since we know that the interest rate, i, has to be greater than the inflation rate, g, the limit of that factor is 0. So after replacing that term with 0 our equation simplifies to the following: Note: I don't do this stuff for a living and honestly don't have a fantastic finance IQ. It's been a while since I've done any calculus or even this much algebra so I may have made an error in the math.