7 Best Funds to Hold in a Roth IRA

By U.S. News & World Report
December 14, 2025 | 7:00 PM

With 2025 ending, savvy savers should start penciling in a few items on their personal finance to-do lists. One of the most important is planning for 2026 Roth IRA contributions. This account was designed for everyday Americans as a tax-sheltered investing option that complements a workplace 401(k) plan.

A Roth IRA offers several features that make it unique. You can withdraw your contributions at any time without taxes or penalties. Once you reach age 59½, you can also withdraw investment earnings tax-free, as long as the account has been open for at least five years. These rules give investors flexibility while rewarding long-term saving.

However, not everyone qualifies for a Roth IRA. To preserve its role as a tool for middle-income households, eligibility is based on modified adjusted gross income, or MAGI.

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For 2026, the income phaseout range for single filers and heads of household rises to between $153,000 and $168,000, up from $150,000 to $165,000 in 2025. Married couples filing jointly face higher thresholds, with a phaseout range of $242,000 to $252,000, compared with $236,000 to $246,000 the year before. These increases reflect inflation and cost-of-living adjustments.

That being said, eligibility for a Roth IRA is not an all-or-nothing test. Investors whose income falls within the phaseout range can make partial contributions, while those above the upper limit are barred entirely. Similar rules apply for married couples filing jointly.

Contribution limits also matter. For 2026, the maximum Roth IRA contribution rises to $7,500, up from $7,000 in 2025. Investors age 50 and older can add a $1,100 catch-up contribution, an increase from the $1,000 limit in 2025. These caps make Roth IRA space valuable and encourage thoughtful fund selection.

For example, capital losses in a Roth IRA cannot be used for tax-loss harvesting, which makes speculative investments less appealing. At the same time, a Roth IRA is usually self-directed, giving investors access to thousands of mutual funds and exchange-traded funds (ETFs) rather than a limited 401(k) lineup.

“Generally, investors should allocate funds that are less tax-efficient in a Roth IRA,” says Lauren Wybar, a wealth advisor executive at Vanguard. “Taxable bonds, real estate investment trusts (REITs) and actively managed stock funds tend to generate more ordinary income and capital gains, which are better sheltered in a Roth IRA.”

Here are seven of the best funds to hold in a Roth IRA:

Fund	Expense ratio
Vanguard Wellington Fund Investor Shares (ticker: VWELX)	0.25%
Vanguard Wellesley Income Fund Investor Shares (VWINX)	0.23%
Vanguard Windsor Fund Investor Shares (VWNDX)	0.36%
Amplify CWP Enhanced Dividend Income ETF (DIVO)	0.56%
Dimensional World Equity ETF (DFAW)	0.25%
Xtrackers USD High Yield Corporate Bond ETF (HYLB)	0.05%
Fidelity Wise Origin Bitcoin Fund (FBTC)	0.25%

Vanguard Wellington Fund Investor Shares (VWELX)

Actively managed mutual funds can be a good fit inside a Roth IRA because they tend to be less tax-efficient in a taxable account. Active managers trade more frequently than passive index funds, which leads to higher portfolio turnover. Even if you do not sell any shares, those trades can generate capital gains that are distributed to shareholders, usually in December, and taxed in a brokerage account.

Inside a Roth IRA, those capital gains distributions are irrelevant, which makes active funds more appealing. VWELX is a classic example. Its roughly 65% stock and 35% bond allocation has delivered an 8.4% annualized return over its lifetime dating back to 1929, a period that included the Great Depression, the dot-com bubble and the global financial crisis. VWELX charges a 0.25% expense ratio.

Vanguard Wellesley Income Fund Investor Shares (VWINX)

“Roth IRAs are an attractive savings vehicle because investors can contribute to them regardless of age and take advantage of tax-free income in retirement, with no required minimum distribution (RMD), unlike a traditional IRA, which requires distributions at age 73,” says Tiana Patillo, a financial advisor manager at Vanguard. For income investors, Vanguard offers VWINX, which has been around since 1970.

This balanced fund follows a similar active stock-and-bond approach as VWELX but with a more conservative tilt. VWINX maintains about a 35% allocation to stocks and 65% to bonds, prioritizing capital preservation and steady income. When held inside a Roth IRA, investors can keep the fund’s above-average 3.6% 30-day SEC yield without tax erosion. VWINX charges a 0.23% expense ratio.

Vanguard Windsor Fund Investor Shares (VWNDX)

“Roth IRAs are especially beneficial for younger investors because there is greater saving potential due to that tax-free compounding,” Patillo says. If long-term growth is the priority rather than current income, an all-equity option such as VWNDX can make sense inside a Roth IRA. Like VWELX and VWINX, VWNDX is an active fund and a long-standing part of Vanguard’s lineup, dating back to 1958.

VWNDX’s active value investing approach uses a multi-manager structure, where several portfolio managers each run a portion of the fund. This setup supports bottom-up fundamental research, meaning managers focus on individual company fundamentals rather than making broad market or sector calls. Since inception, the fund has delivered an 11.3% annualized total return.

Amplify CWP Enhanced Dividend Income ETF (DIVO)

“Given a Roth IRA has no RMD rule, this is usually the last type of retirement account to take distributions (from) compared to traditional IRAs and taxable brokerage accounts,” says Brandon M. Clark, director of financial planning at the Clark Group Asset Management. “In addition, this account is usually the most advantageous for beneficiaries because they inherit the funds tax-free as well.”

Many retirees who want income prefer not to sell shares to fund withdrawals. For those investors, an income-focused ETF such as DIVO can be a practical option. The ETF starts with a concentrated portfolio of 20 to 25 dividend growth stocks. The manager then sells covered calls on a portion of the holdings. This approach limits some upside, but it supports a 5.6% distribution yield with monthly payments.

[READ: 7 High-Yield Covered Call ETFs Income Investors Will Love]

Dimensional World Equity ETF (DFAW)

“We typically recommend owning mostly growth-oriented investments, like stocks, to maximize the return potential over time,” Clark explains. “Of course, everyone’s risk tolerance and goals are different, but broad-based ETFs can be a good option for maximizing a Roth IRA’s growth long term.” An advisor-favored option for that role is DFAW, which goes beyond traditional passive indexing.

Dimensional Fund Advisors is known for its factor-based investing approach. DFAW applies that philosophy across a globally diversified portfolio of U.S., international developed and emerging market stocks. The fund tilts toward smaller companies, lower-priced stocks and more profitable firms. But despite its active implementation, DFAW charges a relatively modest 0.25% expense ratio.

Xtrackers USD High Yield Corporate Bond ETF (HYLB)

High income is not limited to dividend stocks or covered call strategies. Investors can also look to fixed income, particularly high-yield or “junk” bonds. They carry a greater risk of default, but investors are compensated with higher coupon payments. In a taxable account, high-yield corporate bond income is less tax-efficient than Treasurys or municipal bonds because it is subject to federal and state taxes.

Inside a Roth IRA, that drawback becomes irrelevant. All income and gains can compound tax-free, allowing investors to capture the full return potential of high-yield bonds. A low-cost option in this space is HYLB, which charges a very competitive 0.05% expense ratio. Keeping fees low helps preserve income, and HYLB currently pays a monthly distribution that equates to a 6.8% 30-day SEC yield.

Fidelity Wise Origin Bitcoin Fund (FBTC)

“Acting as a tax-free piggy bank, Americans can use Roth IRAs to invest in high-growth assets while maximizing their tax savings in the future,” says Chris Kline, chief operating officer and co-founder of Bitcoin IRA. “It’s one of the reasons Bitcoin, whether via ETFs or direct custody in self-directed IRAs, is becoming a popular choice to diversify within retirement accounts.” For this role, consider FBTC.

FBTC is not the cheapest or the largest spot Bitcoin ETF, but it stands out for its custody structure. Unlike many competitors, the fund does not rely on Coinbase Global Inc. (COIN) as the custodian for its Bitcoin reserves. Instead, Fidelity Digital Assets provides custody, reducing reliance on a single external provider. FBTC charges a 0.25% expense ratio and is well capitalized, with about $18.2 billion in assets.

More from U.S. News

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7 Best Funds to Hold in a Roth IRA originally appeared on usnews.com

Update 12/15/25: This story was published at an earlier date and has been updated with new information

Asia’s next great gourmet destination? Inside Indonesia’s fine-dining revolution

By CNN
August 11, 2026 | 5:44 AM

More than 120 years ago, Eliza Ruhamah Scidmore, National Geographic magazine’s first female writer, photographer and board member, chronicled her travels through colonial Indonesia in her book “Java: The Garden of the East.”She was particularly fascinated by a feast known as the rijsttafel (rice table), a multi-dish banquet that was served in the grand Hotel de Nederlanden in Batavia, as Jakarta was known then.Scidmore vividly recalled a “conglomerate mountain” of food, including bits of fish, duck, chicken, beef, omelettes and onions piled alongside steaks, salads, curries, chutneys, spices and tropical fruits.The sumptuous spread had something to satisfy everyone amongst the 100 or so guests that filled the grand dining hall — even the “squeamish folk, unseasoned tourists and well-starched Britons with a small sense of humor.”Like Scidmore, most early Western documentation of Indonesia’s flavors focused on the opulent colonial feast. Little else was known about the diverse and rich flavors found across the enormous archipelago, in spite of it being home to the fabled Spice Islands, which sparked a 16th- and 17th-century “spice rush” for cloves, nutmeg and mace by Portuguese, Dutch and British traders.In more recent decades, the world has become better acquainted with some of the beloved humble foods found in Indonesian homes and warungs (street-side eateries), with satay, nasi goreng and beef rendang among the most familiar dishes beloved by travelers.But now, there’s a rising number of contemporary chefs who are elevating the national cuisine on the global stage by reimagining its famous spices into fine-dining experiences, while sharing the sophisticated stories of Indonesian flavor through a different lens.Made up of thousands of islands dotted across two oceans, Indonesia is the world’s largest archipelagic country. It would be an understatement to say the country’s cuisine is wildly varied.As a result, “the existing understanding of Indonesian food culture is very shallow,” says William Wongso, an Indonesian culinary expert and author.Boasting an enviable array of regional ingredients and flavors, the country’s chefs have been working to educate international gourmets — and even locals — about the beauty of Indonesian cuisine.And Jakarta, its capital city, has become a breeding ground for the movement. Wongso compares it to the dining scenes in New York or Shanghai, which draw talent from all over their respective countries. “Everybody wants to come here to make a thing,” he says. “So people from different regions bring flavors and food cultures.”Some open humble warungs and serve their home cooking. A few look beyond recipes and focus on elements that make Indonesian cuisine unique for a wider audience, reinventing the whole experience.A modern, fine-dining blueprintEnter August, which opened in 2021 inside a gleaming skyscraper in Jakarta’s central business district.The duo behind the concept, Jakartan Hans Christian and Budi Cahyadi from the Indonesian island of Lombok, were definitely not the first people to promote Indonesian flavors — Christian emphasizes figures like Wongso, for example, who have been championing gastro-diplomacy abroad for decades.But August has spearheaded a new format and standard for the country’s fine-dining restaurants: a modern, Indonesia-inspired tasting menu operating at a world-class level of culinary execution and service.The industry has already noticed. August became one of the few Indonesian restaurants to achieve international recognition, placing 42nd on Asia’s 50 Best Restaurants 2026 and earning accolades at The Best Chef Awards.“When I came back to Jakarta, you either had classic French fine dining or very casual bistros, mostly run by expat chefs,” says Christian, who sharpened his skills in Malaysia and the United States before returning to Jakarta in 2016.“There were no locally grown chefs doing their own thing with their own roots or interpretations. For me, August is about the pride of telling our own story … and a responsibility to not only embrace our roots, but also relearn them.”Cahyadi, with more than a decade of hospitality experience in a luxury hotel, agrees. He currently helms the front of house in August’s dining room.“In Jakarta, you either had to pick a place where the food was good but the service was lousy, or a casual place where service was bad but food was decent. When I met Hans, I knew it was time for a place where food is excellent and hospitality is delivered at the exact same time,” he says.In 2019, the two started August as a private kitchen concept before turning it into the current restaurant in 2021.Inside August’s intimate dining room — warmly lit with dark wood accents and a bright, open stainless-steel kitchen at the end of the dining room — the restaurant’s two tasting menus blend familiar Indonesian flavor profiles into completely unexpected forms.Their daikon dish is inspired by the format of Japanese agedashi tofu — silken tofu coated in starch, deep-fried until golden brown and traditionally dressed in dashi sauce.August’s version is served with a cuko sauce — a sweet and sour reduction made with tamarind and palm sugar featuring a tangy umami taste.It reminds locals of eating pempek, the Indonesian fishcake. A drizzle of andaliman pepper oil, Indonesia’s version of Sichuan peppercorns, gives the dish a unique, numbing spicy kick.Another highlight features Japanese Kimendai fish cooked by pouring hot oil over the scales until it crisps up while keeping the flesh tender. It sits in a kuah garang asem (yellow sour curry sauce) from the Central Java region.The sourness comes from a native green fruit called belimbing wuluh (or bilimbi), which looks like an oblong tomato but tastes extremely acidic, while ginger flowers provide a touch of freshness.The curry base is made from a yellow bumbu — made of aromatics such as turmeric and lemongrass. Often compared with France’s mother sauces (a group of five master sauces, such as Béchamel and Hollandaise, that are said to be the foundation of classical French cooking), Indonesian bumbu are spiced sauces that take hours to caramelize and form the base of many different dishes.Christian says that August has slowly evolved over the years, with more Indonesian flavors being incorporated into his menu as the team gains confidence and the demand grows.“In the beginning, our menu leaned more towards classic European because that was my formal training. When more international guests came, they expected more Indonesian flavor,” says Christian.Now, with half of their guests coming from overseas, the team tries to find the balance carefully without being intimidating.“Finding that balance was crucial — doing modern Indonesian cooking in a way that’s exciting for locals without just putting expensive ingredients in a traditional dish. We want to start from a product or a cooking method and create something new out of that idea,” says Christian.The founders admit that Jakarta has few fine dining concepts compared to fellow Southeast Asian cities such as Kuala Lumpur, Singapore, Manila and Bangkok.“We knew we were a few years behind, but we are in progress to catch up. Over the years, the interest from people who want to learn and taste the flavor of Indonesia is growing,” says Christian. “For the past five to six years, we’ve been on a mission to prove people wrong.”It wasn’t easy. It wasn’t just about the menus, but the operation.They were the first restaurant to impose a reservation fee for diners in Jakarta. It also took a few years to educate their diners to be punctual for the tasting menu so the table could start the menu together – an often tricky feat in Jakarta traffic.But August’s success helped set new operational benchmarks for the city, proving that local diners were ready to enjoy high-end tasting menus.In the years since, Jakarta’s fine-dining community has expanded rapidly.ESA, opened in 2023, proudly offers a menu called New Jakarta Cuisine. Kindling, which opened the following year, blends Indonesian-Chinese dishes with French technique. Selera, newly opened this year in the Keraton at the Plaza hotel, emphasizes the nation’s culinary heritage with local ingredients.Outside the capital, things are changing, too, particularly in the country’s tourist hotspots. Bali, for example, has evolved to offer more than just fine resort dining and Western restaurants catering to visitors.Locavore NXT, helmed by Dutch-Indonesian duo Eelke Plasmeijer and Ray Adriansyah, serves a tasting menu that highlights local ingredients. The independent concept also has a farm, laboratory and store.Meanwhile, young, local and independent concepts are slowly increasing elsewhere in the country.Overlooking the historical Prambanan Temple and Mount Merapi, Suwatu in Yogyakarta, the royal cultural heart of Java, is an upscale hillside restaurant with a menu packed with local dishes cooked by local villagers.In Bandung, both MMBS (Mari Merangkai Bunga Seroja) and Plataran Bandung serve local Sundanese cuisine, with hyper-seasonal tasting menus featuring a creative twist.Not just about the price tagAt the same time, classic Indonesian restaurants are reexamining the stories they would like to tell.For a long time, the 1945 Restaurant inside the Fairmont Jakarta has been regarded as the city’s only high-end Indonesian restaurant in a five-star hotel.Taking over as the chef de cuisine this year, Yopi Tumeru has been determined to inject fresh ideas into the 11-year-old establishment — and he was inspired by the traditional rijsttafel concept.His vision of the legendary feast isn’t only a sumptuous buffet but an educational exploration of Indonesian cuisine.“For many years, Indonesian food was presented either as home cooking, street food or part of a hotel buffet… Our Rijsttafel was designed as a culinary journey through the archipelago. We preserve the generous and communal character of the traditional experience while refining the portions, presentation and sequence,” Tumeru says.The menu includes dishes such as wagyu beef rendang, duck leg confit with sambal madura, tuna collar rica-rica (rahang tuna), tempe nachos and es teler cheesecake — all created to shine new light onto old dishes.For chefs like Tumeru, presenting Indonesian cuisine in a haute gastronomic format isn’t just about slapping on higher price tags and using expensive ingredients.They are proudly showcasing the often undervalued Indonesian cuisine — from the ingredients, the knowledge and the labor to the cultural heritage.“Rendang, for example, is not simply beef cooked in coconut milk. It requires patience, careful control of the heat, and an understanding of how the spices develop over time,” says Tumeru, who feels chefs have a responsibility to help guests appreciate that complexity.Despite giving Indonesian cuisine an upscale makeover, all of the chefs insist their roots and hearts remain with the humble, family-run warung. They encourage diners to ask for street-food tips, which might otherwise feel intimidating without a local guide.The movement isn’t about replacing affordable neighborhood joints. It’s about broadening how the world sees Indonesian food, using fine dining as a welcoming gateway into their country’s vast culinary heritage.“There is still a mindset that Indonesian food cannot be expensive — that is not true,” says Wongso.“These high-end restaurants, if they’re doing it right, they’re quite helpful in changing people’s mindsets. Indonesian food cannot be cheap. It takes immense labor and skill. A single sauce or spice paste takes hours of balancing and preparation. You can Google many things, but you can’t Google taste.”The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

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