Why a Roth IRA Is So Portfolio
The Roth IRA is one of the most powerful retirement accounts available. You contribute after-tax money, your earned income gets taxed upfront, and from that point forward everything grows completely tax free.
Once you reach 59 and a half and meet the 5-year rule, withdrawals are tax free too. No capital gains taxes. No taxes on dividend income. Nothing owed on the way out.1
Unlike a Traditional IRA, where withdrawals are taxed as ordinary income, the Roth IRA lets your money grow completely tax-free.
Contribution Limits and the Math Behind It
The 2026 contribution limit is $7,500 per year, or $625 per month for those under 50.2 Max that out for 20 years and you could be sitting on roughly $500,000. Hold 30 years and that climbs to $1.3 million. Go 40 years and you are looking at $3.5 million, completely tax-free.
Compound interest does the heavy lifting, returns generating their own returns. For single filers, eligibility begins phasing out at $153,000 in modified adjusted gross income for 2026.
ETF Basics
An exchange-traded fund (ETF) holds a basket of assets, often hundreds of individual stocks, bonds, or other securities in a single purchase. That built-in diversification at low cost is why ETFs have become one of the most popular investment options for retirement accounts.
ETFs vs. Mutual Funds and Individual Stocks
Unlike individual stocks, you are not betting on one company. Unlike mutual funds, ETFs trade on a stock exchange throughout the trading day at market prices. ETFs also tend to be more tax efficient than mutual funds because they generate fewer taxable events through how shares are created and redeemed.3
Inside a Roth IRA the account is already sheltered, so the bigger win is keeping low expense ratios. At 0.03%, you pay $3 per year per $10,000 invested. Over decades, that gap between a low cost fund and a pricier one compounds into serious money.
The ETFs below were selected for long-term, 10+ year Roth IRA investing. Each serves a distinct role in a diversified portfolio.
1. Vanguard S&P 500 ETF (VOO)
The S&P 500 Core Every Portfolio Needs
VOO is the largest ETF in the world at $871 billion in assets, tracking the S&P 500 with 504 holdings, a 1.11% dividend yield, and a 0.03% expense ratio. Top ten holdings are 39% of the fund. Tech weighs in at 34%.
As of February 28, 2026: 16.92% past year, 14.13% five-year average, 15.46% ten-year average. Dividends reinvested, expense ratio included.
Warren Buffett has said that many investors are best served by a simple S&P 500 ETF, and publications from USA Today to The Motley Fool have echoed that for years.
For Buffett’s own two-fund approach, the Warren Buffett 2-fund portfolio breakdown on InvestLane covers it.
2. Schwab U.S. Large Cap Growth ETF (SCHG)
Large-Cap Growth for a Long-Term Roth IRA
SCHG tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. Launched in 2009, it has $50 billion in assets, a 0.04% expense ratio, and 198 holdings. The top ten make up 58% of the fund, with 48% in technology.
This is a growth-heavy fund with a 0.36% dividend yield, most of these companies reinvest earnings rather than pay dividends.
Past year: 13.13%. Five-year average: 14.48%. Ten-year average: 18.32%, roughly 3% per year better than VOO over the same stretch. There is a 54% overlap by weight with the S&P 500, so holding both intentionally tilts the portfolio toward growth names. That is the point.
3. Invesco S&P MidCap Momentum ETF (XMMO)
Mid-Cap Stocks With a Momentum Edge
XMMO holds the 79 securities in the S&P MidCap 400 index with the highest momentum scores. It launched in 2005, has $6 billion in assets, and carries a 0.35% expense ratio, higher than VOO or SCHG, but the data makes a case for it.
The top ten holdings are 33% of the fund, tech is 20%, and the fund has 0% overlap with the S&P 500 by weight.
Past year: 23.98%. Five-year average: 13.68%. Ten-year average: 19.48%, the highest 10-year figure of the first three core picks. For a long-term Roth IRA, that kind of genuine diversification away from the large-cap index is exactly what other factors in a portfolio can help balance out.
4: Avantis U.S. Small Cap Value ETF (AVUV)
Small Cap Value With an Active Tilt
Small cap stocks potentially carry more risk, but historically have also delivered strong long-term returns.
AVUV tracks the Russell 2000 Value index and is actively managed to focus on companies with low valuations and higher profitability.
It launched in 2019, has $22 billion in assets, a 0.25% expense ratio, and 784 holdings, broad, well-diversified exposure. The top ten make up just 8% of the fund, with only 6% in tech.
Past year: 23.76%. Five-year average: 12.70%. No 10-year data since the fund launched in 2019. Zero overlap with the S&P 500 by weight.
Many investors who dig into small cap research point to this category as one of the strongest long-term performers across asset classes.
» Want to see more? Compare top index funds through our free cheatsheet
5: Invesco S&P International Developed Momentum ETF (IDMO)
International Stocks for Broad Exposure
IDMO tracks the S&P World Ex-U.S. Momentum Index, targeting developed international markets with the strongest price momentum. It launched in 2012, has $3 billion in assets, a 0.25% expense ratio, and 182 holdings.
The dividend yield is 3.59% over the past 12 months, the highest of the seven core picks and a solid source of dividend income inside a tax-free Roth account.
Past year: 41.99%. Five-year average: 16.21%. Ten-year average: 14.00%. Zero overlap with the S&P 500 by weight.
Many large US companies already have significant revenue from emerging markets and global operations, but IDMO adds a layer of investors exposure to international developed economies that the domestic funds simply do not capture.
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6: Fidelity Wise Bitcoin Fund (FBTC)
Bitcoin Exposure in a Regulated Fund
Bitcoin is volatile, that is not a secret. But as a small allocation in a long-term Roth IRA, the potential return and low correlation to traditional stocks and bonds funds invest in makes it worth a look.
FBTC launched in 2024, has $13 billion in assets, and carries a 0.25% expense ratio.
Past year: down 22.24%. Five-year Bitcoin index average: 19.30%. Ten-year Bitcoin index average: 69.50%. Those long-term numbers are unlikely to repeat now that the asset is mainstream, but the diversification argument still stands with a 2% to 3% allocation.
If liquidity is a priority, the iShares IBIT is another popular ETFs option in this space. Investors looking at crypto platforms can check out InvestLane’s cryptocurrency exchange review for where to start.
7: SPDR Gold ETF (GLD / GLDM)
Gold as a Hedge in Your Roth IRA
Gold does not pay dividends. It does not grow earnings. But it has a long track record of holding value when other investments fall, and that hedging role is exactly why a small allocation makes sense in a long-term Roth IRA.
GLD launched in 2004, holds $176 billion in assets, and has a 0.4% expense ratio. GLDM is the lower-cost version at 0.1%, though it is less liquid.
Past year: 83.75%. Five-year average: 24.47%. Ten-year average: 15.08%. Zero overlap with the S&P 500. A 2% to 3% position adds real portfolio protection without relying on gold for growth.
Aggressive Option: SPMO
SPMO isn’t one of the 7 core picks, but it’s a strong options for investors who want a more aggressive approach instead of or alongside SCHG.
The Invesco S&P 500 Momentum ETF (SPMO) holds the 100 stocks in the S&P 500 with the highest momentum scores. Launched in 2015, $13 billion in assets, 0.13% expense ratio.
Performance has been strong, with a 20.49% return over the past year, a 19.38% annualized return over five years, and 18.50% average over ten years.
It only has a 30% overlap with the S&P 500 by weight compared to 54% for SCHG, making it a more unique addition to a portfolio. For investors who believe in a continued bull market, SPMO is a compelling option to consider.
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Example Portfolio
What These 7 Best ETFs Looked Like Together
One simple example:
- 50% VOO
- 20% SCHG
- 10% XMMO
- 10% AVUV
- 5% IDMO
- 2.5% FBTC
- 2.5% GLD.
With data from January 2020 to February 2026, this allocation turned $100,000 into roughly $272,000 at a 17.63% average annual return.
VOO alone turned $100,000 into about $233,000 at 14.70% over the same stretch. Past performance is not a guarantee, but the numbers show what spreading across asset classes can do versus a single index fund.
Choosing the Best Investments for Your Roth IRA
Not every investor should hold the same portfolio. Someone with 30 years has room to absorb volatility. Someone a decade out may want simpler investment options and lean heavier on VOO. Risk tolerance is personal.
The goal of this list is to give you a range of well-researched funds so you can choose investments that match your situation. For more on growth-focused funds, the 6 best growth ETFs article covers other options worth knowing.
For beginners, a great place to start is our free Index Fund Cheatsheet, which highlights the top investments to consider. For a comparison of top platforms to open an account, InvestLane’s Best IRA Accounts Review is also a solid starting point.
Your Next Steps
Low expense ratios, genuine diversification, and time in the market. That is the formula. The Roth IRA’s tax advantages take care of the rest. For investors who want to go more aggressive, SPMO is the alternative to consider instead of or alongside SCHG.
For everyone else, an S&P 500 ETF like VOO is where most people start, and what Warren Buffett recommends.
Stay consistent and let compound interest do its job.
» Ready to open a Roth IRA? See InvestLane’s review of the best IRA accounts
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