Should You Stack Your Roth IRA With High-Potential 5G, FinTech, and Big Data Stocks?

Taxation can drastically alter lifestyle in retirement by reducing investment gains, and Roth IRAs are a great tool for limiting that risk.

Contributions to Roth accounts may not share the contribution tax deductions of 401(k)s or traditional IRAs, but investors will enjoy zero taxation on withdrawals in retirement. 401(k) distributions are taxed as ordinary income, and investments held in brokerage incur capital gains taxes. This makes Roths a fantastic place to house the high growth portion of a retirement portfolio because taxation could wipe out more gains in other accounts. This is especially true for young investors with long time horizons or retirees who are maintaining a growth portion of their portfolio.

There are plenty of high-growth opportunities in the market, but a great way to responsibly balance risk with long-term gains is to purchase niche ETFs that are exposed to growth trends that are expected to characterize the next few decades. This approach offers diversified exposure without being pulled down by stable, but low-growth investments.

Source Fool.com