Roth IRA Investments: Do You Want High Dividends Or Rapid Growth?

When investing within the confines of a Roth IRA, there are two different strategies that an investor can pursue (or combine them both) to work around the $5,500 maximum contribution limit that are allowed to put into the account.

The first strategy involves focusing on growth that you can convert into income later—imagine if you spent a couple years putting $5,500 into something like Visa, Disney, or Becton Dickinson. They tend to grow in the 10-13% range, although neither of the three companies pay a particularly high starting dividend yield at the moment.

If you were to let those three companies do their thing for twenty years, and you had $16,500 left to compound at 12% annually, those three stocks would have a combined value of somewhere around $179,000 in the year 2034. Although Congress will likely raise the rate of annual contributions permitted to a Roth IRA over the … Read the rest of this article!