Should I invest in index funds or buy individual stocks for my Roth IRA?

Asked 3 years ago

In a Roth, would you do index funds, say voo or something similar, or should I actually do individual stocks? I already have a taxable account in M1 finance for dividend building, and index funds for Roth? Opinions?

Index funds Single stocks Roth ira Investment advice

Andrew Moran

Wednesday, July 14, 2021

Since this is most likely a long-term investment, you would be better off parking your Roth IRA funds in an index fund that mirrors the composition and performance of something like the S&P 500.
This is also true if you are not someone who routinely monitors the stock market. If you dollar-cost average your Roth IRA, your index investing can yield as good of a return as picking individual stocks.
Moreover, index funds can still provide you with dividends. In some cases, if you find the right exchange-traded fund (ETF), you could also earn a monthly payment.
That said, if you prefer individual stocks, some good ideas would be:
Procter & Gamble Co (PG)
07/13: $137.00
Dividend Yield: 2.54%
Wendys Co (WEN)
07/13: $22.79
Dividend Yield: 1.76%
Apple (AAPL)
07/13: $145.64
Dividend Yield: 0.6%