7 Best Roth IRA Investments for 2025

Introduction:

While the financial headlines in 2025 are filled with talk of market turbulence and tariff changes, it’s crucial to stay focused on the basics of personal finance. One of the most important dates to remember is April 15, which marks the final day to contribute to a Roth IRA for the 2024 tax year.

A Roth IRA is a powerful tool for building long-term, tax-free retirement income. Unlike a 401(k) or health savings account (HSA), it comes with more flexibility. For example, you can withdraw your original contributions anytime without facing penalties. And once you reach age 59½ and have had the account for five years, your withdrawals — including earnings — are completely tax-free. That makes it an ideal account for generating retirement income without worrying about taxes down the line.

However, Roth IRA contribution limits are capped, so it’s essential to plan ahead. For both 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 said, your ability to contribute depends on your income. For 2024, single filers must earn less than $146,000 and married couples filing jointly must earn under $230,000 to make the full contribution. Those thresholds increase slightly in 2025 to $150,000 and $236,000, respectively. If you earn above these levels, your eligibility to contribute is reduced or eliminated entirely.

Because the Roth IRA offers limited contribution space and doesn’t let you claim losses for poor investments, it’s wise to be selective. This is not the place for idle cash or high-risk bets. Experts recommend using Roth IRAs for investments that are less tax-efficient — such as taxable bonds, real estate investment trusts (REITs), and actively managed mutual funds — since their gains can grow tax-free in this account.

Here are seven strong mutual funds and ETFs to consider holding in a Roth IRA:

Summary

1. Vanguard Wellington Fund Investor Shares (VWELX)
2. Vanguard Wellesley Income Fund Investor Shares (VWINX)
3. Amplify CWP Enhanced Dividend Income ETF (DIVO)
4. Simplify Volatility Premium ETF (SVOL)
5. Vanguard Small-Cap Value Index Fund Admiral Shares (VSIAX)
6. Schwab U.S. Broad Market ETF (SCHB)
7. Fidelity Wise Origin Bitcoin Fund (FBTC)

1. Vanguard Wellington Fund Investor Shares (VWELX)

VWELX is a hybrid fund that balances growth and income by investing approximately 65% of its assets in large-cap value stocks and 35% in high-quality investment-grade bonds. This blend allows for both appreciation and stability, which is ideal for long-term retirement Investors. Because it is actively managed, VWELX can generate significant capital gains distributions, especially during strong market years. Holding this fund in a Roth IRA ensures these gains won’t be taxed, maximizing your compounding potential. It has a long history dating back to 1929 and has weathered numerous market downturns, making it a dependable cornerstone for a retirement portfolio. The current 30-day SEC yield is about 2.3%, providing steady income on top of potential price appreciation.

2. Vanguard Wellesley Income Fund Investor Shares (VWINX)

VWINX is the more conservative sibling to VWELX, flipping the stock-to-bond ratio to around 35% equities and 65% fixed-income assets. This structure is well-suited for investors seeking steady income with lower volatility — ideal for pre-retirees or those already in retirement. The fund is managed by the same experienced team as VWELX and focuses on high-quality, dividend-paying companies alongside investment-grade bonds. Its 3.9% yield and strong long-term performance (over 9% annualized since 1970) make it attractive for income-focused investors. Since Roth IRAs don’t require minimum distributions and allow for tax-free income, VWINX can be a reliable income-generating option inside this account structure. The $3,000 minimum investment is a consideration, but the low 0.23% expense ratio helps preserve more of your return.

3. Amplify CWP Enhanced Dividend Income ETF (DIVO)

DIVO is an income-oriented ETF that targets blue-chip dividend-growing stocks like Microsoft, Johnson & Johnson, and McDonald’s. What sets DIVO apart is its use of a covered call strategy — it writes options on select holdings to generate additional income. This approach limits upside potential during bull markets but can provide a consistent stream of income, even in sideways markets. The ETF currently has a distribution yield of 4.9%, which aligns well with safe withdrawal strategies in retirement. Because covered call premiums are taxed as short-term capital gains in a taxable account, placing DIVO in a Roth IRA lets you avoid those taxes entirely, making its income even more efficient. The 0.56% expense ratio is higher than a passive ETF, but it’s reasonable for an income-generating strategy.

4. Simplify Volatility Premium ETF (SVOL)

SVOL is a unique ETF that uses a volatility-based strategy. It seeks to profit from the volatility premium by shorting VIX futures — essentially betting that expected market volatility will decline or remain stable. This contrarian strategy can be risky, but it’s also highly rewarding, especially when the market is calm or steadily rising. SVOL is designed to generate high monthly income, with a current distribution yield of around 15.7%. It also includes hedges to protect against sharp market spikes. Because this fund generates a large amount of short-term taxable income, it’s ideal to hold in a Roth IRA where that income is shielded from taxes. Its high yield can help power your Roth IRA’s growth over time, but due to the fund’s complexity and risk profile, it’s best for more experienced or risk-tolerant investors.

5. Vanguard Small-Cap Value Index Fund Admiral Shares (VSIAX)

VSIAX tracks the performance of the CRSP U.S. Small Cap Value Index, giving investors exposure to smaller, undervalued U.S. companies. Historically, small-cap value stocks have outperformed the broader market over the long term, albeit with more volatility. This fund is particularly appealing for younger investors who have decades to let their investments grow and can handle short-term swings. Since small-cap value companies often distribute dividends and can be less tax-efficient in taxable accounts, holding them in a Roth IRA maximizes the benefit of tax-free growth. VSIAX charges just 0.07% in expenses, which is extremely cost-effective for a factor-based strategy. Note that it requires a $3,000 minimum investment, making it more suitable for investors with a bit more to contribute upfront.

6. Schwab U.S. Broad Market ETF (SCHB)

SCHB offers exposure to a broad range of U.S. stocks — about 2,500 in total — across small-, mid-, and large-cap segments. Its index is weighted by market capitalization, so larger companies like Apple, Microsoft, and Amazon make up a significant portion of the portfolio. Despite that, it provides a solid base of diversification. SCHB is a strong choice for core Roth IRA holdings because of its growth potential, low turnover, and very low 0.03% expense ratio. There are no investment minimums beyond the price of a share (or less with fractional shares), making it accessible for all investors. Its broad exposure makes it suitable for beginners or anyone looking to build a foundational, long-term investment strategy in a tax-advantaged account.

7. Fidelity Wise Origin Bitcoin Fund (FBTC)

FBTC is one of the Leading spot Bitcoin ETFs, providing investors with direct exposure to the price of Bitcoin without needing to manage private keys or digital wallets. The fund is custodied by Fidelity, which gives it a trust factor compared to competitors using third-party platforms like Coinbase. While Bitcoin is a highly volatile asset, its potential for outsized returns makes it attractive for long-term investors willing to accept the risk. A Roth IRA is a strategic place to hold high-growth, high-volatility investments like Bitcoin, because any long-term gains are shielded from taxes. This could result in significant tax savings over time, especially if Bitcoin prices rise dramatically. FBTC has a reasonable 0.25% expense ratio and strong liquidity, with tight bid-ask spreads that help minimize trading costs.

Frequently Asked Questions 

Q.1: What is the contribution limit for a Roth IRA in 2024 and 2025?
A.1: You can contribute up to $7,000 per year, or $8,000 if you’re age 50 or older, for both 2024 and 2025.

Q.2: Who can contribute to a Roth IRA?
A.2: For the 2024 tax year, single filers must have a modified adjusted gross income (MAGI) below $146,000, and married couples filing jointly must earn under $230,000. These limits rise to $150,000 and $236,000, respectively, for 2025.

Q.3: Why are Roth IRAs better for certain investments?
A.3: Roth IRAs are ideal for tax-inefficient assets like high-dividend stocks, actively managed funds, and ETFs that generate short-term gains. You won't owe taxes on dividends or gains, allowing those returns to compound over time.

Q.4: Can I withdraw my contributions anytime?
A.4: Yes. You can withdraw your contributions (but not earnings) at any time, tax- and penalty-free. Once you're 59½ and have had the account for at least five years, all withdrawals — including earnings — are tax-free.

Q.5: What happens if I contribute too much to my Roth IRA?

A.5: Excess contributions are subject to a 6% penalty for each year they remain in the account. To avoid this, you must withdraw the excess amount (and any earnings) before the tax filing deadline, including extensions.

Conclusion

A Roth IRA is more than just a retirement account — it’s a powerful vehicle for building long-term, tax-free wealth. But contribution space is limited, so every dollar counts. By choosing the right investments — those that benefit most from tax-free treatment — you can get more mileage from your contributions.

Whether you’re seeking stable income, long-term growth, or even exposure to emerging assets like Bitcoin, there's a strategy to suit your needs. Just make sure to contribute by April 15, 2025 for the 2024 tax year — and make your Roth IRA work harder for you.

Important Note: Please Read Before You Invest

We're just sharing some helpful tips, but remember, investing comes with risks. We can't promise that these tips will always work or that you'll make money. Everyone's financial situation is different, so it's smart to do your research or talk to a financial advisor before you invest. Using these tips, you agree that you're responsible for your investment decisions and results.