How to Invest in Your Roth IRA: A Beginner-Friendly Guide (Start With Just $5)
If you’ve already opened your Roth IRA at Fidelity – great! But here’s what many beginners don’t realize: knowing how to invest in a Roth IRA is a completely separate step from opening and funding the account.
Until you actually purchase investments in your Roth IRA, your money is sitting in cash, earning almost nothing. The account is open. The tax-free growth clock hasn’t started yet. That happens when you buy your first investment.
This post walks you through exactly how to do that, step by step, with two clear options depending on how hands-on you want to be.
At Orolaia, our goal is to make investing feel less like a foreign language and more like something you can actually do – starting today, with whatever you have.
How to Invest in a Roth IRA (Step-by-Step Overview)
If you’re wondering how to invest in a Roth IRA, here’s the simplest way to get started:
- Choose an investment (target date fund or index fund)
- Log into your Roth IRA
- Search for your chosen fund by name or ticker symbol
- Buy using a dollar amount (you can start with $5)
- Set up recurring investments
What Are You Buying When You Invest in a Roth IRA?
When you invest in a Roth IRA, you’re purchasing assets – most commonly index funds or target date funds. A fund pools money from many investors to buy a collection of stocks, bonds, or both. Instead of picking individual companies, you own a small piece of many at once.
There are two types of funds that make the most sense for beginners:
1. Target Date Funds: a single, all-in-one fund that automatically adjusts over time
2. Index Funds: a low-cost fund that tracks a specific market index, like the total U.S. stock market or the S&P 500
Both are solid long-term investment options for a Roth IRA. The right choice depends on how much involvement you want in managing your investments. We’ll cover both below.
Option 1: Target Date Funds (Best for Hands-Off Investors)
A target date fund is designed to be the only investment you ever need. You pick one based on when you plan to retire, and the fund does the rest – automatically adjusting its mix of stocks and bonds as you get closer to that date. More aggressive (more stocks) when you’re young, more conservative (more bonds) as you approach retirement.
At Fidelity, look for the Fidelity Freedom Index Fund series. Find the one that matches your approximate retirement year:
- Planning to retire around 2045? → FIOFX (Fidelity Freedom Index 2045)
- Planning to retire around 2050? → FIPFX (Fidelity Freedom Index 2050)
- Planning to retire around 2055? → FDEWX (Fidelity Freedom Index 2055)
- Planning to retire around 2060? → FDKLX (Fidelity Freedom Index 2060)
These funds have low expense ratios and no minimum investment – you can start with $1.
Not sure when you’ll retire? A common rule of thumb is to subtract your current age from 67 (a typical retirement age) and add that to the current year. That gives you a rough target date to work with.
Option 2: Index Funds (Best for Beginners Who Want Control)
An index fund tracks a specific market index (a defined list of companies) rather than being actively managed by someone picking stocks. Because they’re not actively managed, they tend to have very low fees and historically perform well over the long term.
At Fidelity, two index funds come up most often for beginners:
FZROX: Fidelity ZERO Total Market Index Fund
- Tracks the entire U.S. stock market – thousands of companies of all sizes
- Expense ratio: 0% (no annual fee)
- Minimum investment: $1
- Exclusive to Fidelity accounts
FXAIX: Fidelity 500 Index Fund
- Tracks the S&P 500 – the 500 largest U.S. companies
- Expense ratio: 0.015% (essentially free)
- Minimum investment: $1
What’s the difference? FZROX includes small and mid-size companies in addition to large ones, giving you broader exposure to the entire market. FXAIX focuses only on the 500 largest. Historically, both have performed similarly over long periods. Either is a solid starting point. The most important thing is choosing one and getting started.
This content is for educational purposes only and not financial advice. Always do your own research and consult a licensed financial professional for guidance specific to your situation.
How to Invest in Your Roth IRA at Fidelity (Step-by-Step)
Once you’ve decided which fund you want, here’s how to purchase it in your Roth IRA:
Step 1: Log in to your Fidelity account
Go to fidelity.com and log in.
Step 2: Navigate to your Roth IRA
From your account dashboard, select your Roth IRA account – not your brokerage account if you have both.
Step 3: Click “Trade”
In the top navigation, click on Accounts & Trade → Trade.
Step 4: Search for your fund
In the search bar, type the fund name or ticker symbol (e.g., FZROX or FDEWX). Select the correct fund from the results.
Step 5: Select “Buy”
Click Buy to open the order form.
Step 6: Choose “Dollars” and enter your amount
Under quantity, select Dollars (not shares) and enter the amount you want to invest – even $5 works. Buying in dollars rather than shares means you can invest any amount without worrying about share prices.
Step 7: Review and confirm
Review your order (fund name, dollar amount, and account) and click Confirm. For mutual funds like FZROX and FXAIX, your order will execute at the end of the trading day. For ETFs, it executes during market hours.
That’s it. Your money is now invested and your tax-free growth has officially begun.
What About the $5?
You read that right – you can start with $5.
There’s no minimum investment for the funds listed above, and Fidelity allows you to buy in dollar amounts rather than whole shares. So if you have $5 in your Roth IRA right now, you can invest all of it today.
The amount is less important than the habit. A $5 investment made today, added to consistently over months and years, compounds into something meaningful. The goal right now is to get started, not to get started with the perfect amount.
After Your First Purchase: What to Expect
Your balance will fluctuate. This is normal. The market goes up and down, and your account balance will reflect that. Resist the urge to check it every day or make changes based on short-term movement. These are long-term investments.
Dividends will be reinvested. If you selected “Reinvest” when setting up your account preferences (as covered in the previous post), any dividends your fund generates will automatically purchase more shares – compounding your growth without any action on your part.
You’ll need to keep investing. One purchase is a start, not a finish. Return to Step 8 and Step 9 from the how to open a Roth IRA at Fidelity step-by-step to set up automatic contributions and recurring investments so your Roth IRA keeps growing consistently.
Quick Recap: Your Two Options
Target Date Fund vs Index Fund: Quick Comparison
| Target Date Fund | Index Fund | |
|---|---|---|
| Best for | Hands-off investors | Hands-on investors |
| Example at Fidelity | FDEWX (2055) | FZROX or FXAIX |
| Adjusts automatically | Yes | No |
| Expense ratio | Low | 0–0.015% |
| Minimum investment | $1 | $1 |
| Complexity | Very simple | Simple |
A note on diversification: The two options above are starting points, not limits. As your account grows and your confidence builds, you can invest in more than one fund, spreading your money across different types of assets to reduce risk. We’ll cover how to think about building a diversified portfolio in a future post. For now, picking one fund and getting started is the right move.
You’re Investing Now
Opening a Roth IRA is a milestone. Making your first investment in it is where the work actually begins and where the tax-free compounding starts.
Whether you chose a target date fund or an index fund, whether you started with $5 or $500, the most important thing is that you started.
Next in this series:
- 👉 Roth IRA vs. 401k – Which One Should You Prioritize? → (Coming soon)
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