The first thing savers need to do when opening a Roth IRA is decide whether they want to invest money in stocks, real estate, bonds, certificates of deposit or mutual funds, states the Get Rich Slowly organization. The rate of return on each type of investment is dependent on the amount of risk involved, as well as the state of the economy. Certificates of deposit carry little risk but a low interest rate while stocks carry more risk but a higher interest rate.
Savers should be aware that there is a maximum amount they are allowed to save with a Roth IRA and the contribution cannot be more than they earned, notes Kiplinger. The money grows tax free, and withdrawals are allowed at any time without penalty. Investors can use a Roth IRA to fund a child's education, save a down payment for a home or car and save for retirement.