Building long-term, tax-free retirement wealth sounds appealing. But what exactly can you invest in with a Roth IRA to get there? The answer depends on the type of Roth IRA you have and which provider you use. Some accounts are limited to familiar options like stocks, bonds, and mutual funds. Others can be expanded to include real estate, private equity, or even cryptocurrency.
Roth IRAs are known for their unique tax advantages. You contribute after-tax income, and in return, qualified withdrawals in retirement are tax-free. But how you grow that money depends entirely on the investments you choose.
Read on to learn which investments are allowed in a Roth IRA, which ones are off-limits, and how to access a broader range of options if you want more control over your portfolio.
Roth IRA Investment Options
A Roth IRA typically includes a wide range of publicly traded assets. These accounts are offered by major brokerage firms and are user-friendly, with lower fees and easy online access. Your exact investment menu will depend on your provider, but common options include:
✅ Individual stocks – Buy and sell shares of publicly traded companies.
✅ Mutual funds – Pooled funds managed by professionals, often used for diversified retirement exposure.
✅ Bonds – Includes U.S. Treasury, municipal, and corporate bonds.
✅ ETFs (Exchange-Traded Funds) – Funds that trade like stocks but offer built-in diversification.
📝 Note: Unlike a 401k, which typically restricts you to a small set of pre-selected funds, a Roth IRA (especially through a brokerage) often gives you much more flexibility to choose specific assets.
Can a Roth IRA Hold Alternative Investments?
Yes, but not through a traditional Roth IRA. To invest in alternatives, you’ll need a self-directed Roth IRA, which is a special type of account designed to hold nontraditional assets.
A self-directed Roth IRA allows you to invest in:
- Real estate (residential or commercial)
- Convertible notes
- Private equity (including venture capital, hedge funds, or private placements)
- Private company stock
- SAFEs (Simple Agreements for Future Equity), RUVs (Roll-Up Vehicles), and SPVs (Special Purpose Vehicles)
These accounts must be opened with a custodian that specializes in alternative assets. Most large brokerage firms do not offer them.
Self-directed IRAs come with more complexity and typically higher fees. You are responsible for conducting due diligence on each investment, and the custodian’s role is limited to holding the asset, not offering advice or making recommendations.
📝 Note: Because of the added responsibility and stricter IRS rules (especially around prohibited transactions), self-directed Roth IRAs are better suited for experienced investors who want to access nontraditional markets.
Who Can Open a Roth IRA?
Not everyone qualifies to contribute directly to a Roth IRA each year. Eligibility depends on two factors: your earned income and your modified adjusted gross income (MAGI). Anyone with earned income can open a Roth IRA, as long as their income for the year doesn’t exceed the Roth IRA income limits.
Even if your income is high, there are still ways to fund a Roth IRA, but you may need to take an indirect approach.
Roth IRA Income Limits for 2025
| Filing Status | Full Contribution | Partial Contribution | Not Eligible |
| Single | Under $150,000 | $150,000–$164,999 | $165,000+ |
| Married Filing Jointly | Under $236,000 | $236,000–$245,999 | $246,000+ |
How Much Can You Contribute in 2025?
- $7,000 if you’re under age 50
- $8,000 if you’re 50 or older (catch-up contribution)
These are total annual contribution limits across all your Roth and traditional IRAs combined.
Can You Still Invest If You Earn Too Much?
Yes, but not directly. High earners often use strategies like the mega backdoor Roth or backdoor Roth IRA to get money into a Roth account:
- Backdoor Roth IRA – Contribute to a traditional IRA, then convert it to a Roth IRA. This works best if you have no pre-tax IRA balances.
- Mega Backdoor Roth – Make after-tax contributions to a 401k, then roll them into a Roth IRA or in-plan Roth 401k, if your workplace plan allows.
📝 Note: These strategies come with additional tax rules and may not be suitable for everyone. It’s best to consult a qualified professional before proceeding.
Are Roth IRA Investments Taxed?
No, as long as the rules are followed. A Roth IRA offers tax-free growth and tax-free qualified withdrawals in retirement.
- You contribute after-tax dollars. There’s no upfront deduction.
- Your investments grow tax-free while in the account.
- Qualified withdrawals in retirement are not taxed, regardless of how much your investments earned over the years.
📝 Note: You do not owe taxes on dividends, interest, or capital gains earned inside the Roth IRA.
When Can You Withdraw Money from a Roth IRA?
Roth IRAs have unique withdrawal rules based on whether you’re taking out contributions or earnings.
- Contributions: You can withdraw your original contributions at any time, for any reason, tax- and penalty-free.
- Earnings: To withdraw investment earnings without taxes or penalties, both of these conditions must be met:
- You are at least 59½ years old, and
- The Roth IRA has been open for at least 5 years.
Wrapping It Up
A Roth IRA gives you room to grow your retirement savings without future tax bills. You can stick with traditional investments like stocks and funds, or expand into alternatives through a self-directed account. The right choice depends on your goals and how much control you want over your portfolio.
Make sure to follow the income limits and contribution rules each year. Know when your withdrawals qualify for tax-free treatment. These details matter if you want to keep your growth and distributions free from taxes and penalties.
Disclaimer:
The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.
The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. All statements and opinions included on the Carry Learning Center are intended to be current as of the date of publication but are subject to change without notice.
To access investment advisory services through Carry Advisors, you must be a client of Vibes on an eligible membership plan. For more information about Carry Advisors’ investment advisory services, please see our Form ADV Part 2A brochure and Form CRS or through the SEC’s website at www.adviserinfo.sec.gov.