Easy Roth IRA Portfolio Ideas for Young Investors

When I was in college at LSU, around 23 or 24 years old, I started getting serious about investing. I spent a lot of time watching YouTube channels from experts like Graham Stephan and Certified Financial Planner Jeff Rose, who helped me understand the importance of starting early and making smart financial decisions. These early influences, combined with my finance classes, laid the foundation for my investing journey.

As I progressed into my career as a financial planner, I gained deeper insights into how different types of funds like small-cap, mid-cap, international, and dividend-focused can play a role in building a well-rounded portfolio.

One question I hear frequently from friends my age is, “Should I just invest in the S&P 500, or is there a better way to build a portfolio?” While the S&P 500 is a solid start, diversifying across market caps and including international exposure through low-cost ETFs can help manage risk and boost growth over time.

In this post, I’ll share simple and effective Roth IRA portfolio ideas for young investors and explain why I prefer using Charles Schwab ETFs to build a diversified, easy-to-manage portfolio that can grow steadily over the long haul.

Why a Roth IRA and Why Charles Schwab?

A Roth IRA is one of the best retirement accounts for young investors because your contributions grow tax-free, and qualified withdrawals in retirement aren’t taxed. Since you fund a Roth IRA with after-tax dollars, you won’t owe taxes on your gains or distributions later. This makes it especially powerful if you expect to be in a higher tax bracket down the road.

Starting early with a Roth IRA means you can take full advantage of compounding growth over decades and making it a smart vehicle for building long-term wealth.

As for where to open your Roth IRA, I chose Charles Schwab for several reasons. I actually started investing with TD Ameritrade and really liked their thinkorswim platform for its powerful tools. When Schwab acquired TD Ameritrade, it felt natural to transition over.

While Schwab’s platform isn’t quite as simple or flashy as Robinhood, I feel safer with Schwab because of their reputation, customer service, and the robust tools they offer.

Schwab provides:

• Low fees with commission-free ETF and stock trades, keeping investing costs minimal.

• A wide selection of quality, low-cost ETFs that fit perfectly into a diversified Roth IRA portfolio.

• A user-friendly platform with an intuitive website and mobile app for investors at any level.

• Strong customer service that gives me confidence managing my investments.

• Continued access to the thinkorswim platform, so I didn’t lose the tools I valued.

All these factors combined make Schwab an excellent choice for young investors building a simple, effective Roth IRA portfolio.

What Should I Invest In? The Most Common Question I Hear

One of the questions I get asked most often is from friends my age who are just starting out is: “What should I invest in? Should I just put my money in the S&P 500, or is there a better approach?”

The S&P 500 is a fantastic place to start. It covers 500 of the largest U.S. companies (large caps) and offers solid growth over time. But for young investors with a long time horizon, there’s an opportunity to build a more diversified portfolio that can help manage risk and maximize returns by including:

• Large-Cap Stocks: Stable, established companies that provide a solid foundation.

• Mid-Cap Stocks: Companies more established than small caps but still with strong growth potential.

• Small-Cap Stocks: Smaller companies with higher growth potential and more risk.

• International Stocks: Exposure outside the U.S. adds diversification and access to global growth.

• Dividend Stocks: These can provide steady income and tend to be less volatile.

My Roth IRA Portfolio

Here’s how I’ve put this into practice in my own Roth IRA using Charles Schwab ETFs:

• CALF: Pacer US Small Cap Cash Cows ETF – small-cap companies with strong cash flow.

• FNDE: Schwab Fundamental Emerging Markets ETF – international and emerging market diversification.

• SCHA: Schwab U.S. Small-Cap ETF – broad small-cap exposure.

• SCHD: Schwab U.S. Dividend Equity ETF – large-cap U.S. dividend-paying companies.

• SCHM: Schwab U.S. Mid-Cap ETF – mid-sized U.S. companies with growth potential.

This mix gives me exposure to every major equity class with large, mid, and small caps as well as international markets. It’s a balanced, growth-oriented strategy designed to benefit from long-term compounding while staying diversified.

Why I Took This Approach (vs. Just the S&P 500)

The S&P 500 (like buying a fund such as VOO or SCHX) is a great option for passive investors and I do recommend it for many people just starting. But by diversifying across different segments of the market, I’m giving myself more exposure to high-growth opportunities (like small-cap and emerging markets) and income (through SCHD).

This layered approach can help smooth out volatility and potentially boost returns over time.

Estimated Growth Over Time

Let’s say I contribute consistently to my Roth IRA over the years and take advantage of catch-up contributions later in life. Assuming an average return of 8–10% annually and a reasonable estimate for a diversified stock portfolio this strategy could potentially grow to over $2 million or more by retirement, especially because I started in my 20s and have decades of compounding ahead.

Why I Chose Each Fund

Here’s a quick breakdown of why each ETF is in my Roth IRA and how it fits into the bigger picture:

• CALF (Pacer US Small Cap Cash Cows ETF): I wanted exposure to small-cap stocks but with a quality filter. CALF focuses on small companies with strong free cash flow, which can offer upside potential with a bit more stability than typical small-cap picks.

• FNDE (Schwab Fundamental Emerging Markets ETF): I chose this for international diversification. FNDE uses a fundamental strategy to select stocks in emerging markets, which gives me access to faster-growing economies outside the U.S.

• SCHA (Schwab U.S. Small-Cap ETF): This is my broad small-cap exposure. It adds diversity within the U.S. market by targeting the smallest publicly traded companies — a space often overlooked but full of long-term potential.

• SCHD (Schwab U.S. Dividend Equity ETF): SCHD gives me large-cap dividend-paying companies with solid fundamentals. It’s known for strong performance, quality holdings, and reliability. I like that it can add some stability and cash flow to the portfolio.

• SCHM (Schwab U.S. Mid-Cap ETF): This gives me exposure to mid-sized U.S. companies that are still growing but a bit more established than small-caps. It rounds out my U.S. exposure nicely between large (SCHD), small (SCHA, CALF), and mid-caps (SCHM).

Together, these funds help me cover the market from multiple angles while staying low-cost and growth-focused.

Don't Stress If You Can’t Max It Out Yet

One thing I always tell people is this: you don’t have to max out your Roth IRA to get started.

Even if you’re only able to invest $50 or $100 a month, that’s enough to start learning how investing works and to build the habit early. The earlier you begin, the more time your money has to grow through compounding and the more confident you'll become navigating your own financial future.

Consistency > Perfection. Start with what you can, increase contributions over time, and let experience and discipline build your momentum.

A Quick Look at Roth IRA Rules

Here are a few basic guidelines you should know if you're new to Roth IRAs:

• For 2025, the annual contribution limit is $7,000 (or $8,000 if you're age 50+).

• You must have earned income to contribute (wages, salary, self-employment income, etc.).

• Contributions are made with after-tax dollars, so withdrawals in retirement (after age 59½ and after 5 years) are tax-free.

• You can withdraw your contributions (not earnings) at any time, tax- and penalty-free.

• Income limits apply — high earners may be phased out from contributing directly to a Roth IRA.

Want to get started with Charles Schwab? Use my referral link here:https://www.schwab.com/client-referral?refrid=REFERE6PJRMBK It’s what I personally use because it's a solid platform, great support, and excellent fund choices.

A Note on Ethical Investing

Since much of my content focuses on biblical principles, stewardship, and faith-based financial planning, I want to pause and acknowledge something important: the ETFs and strategies I’ve shared in this post aren’t perfect from an ethical or biblical investing standpoint.

In an ideal world, every investment we make would align 100% with our values and avoiding companies involved in exploitative practices. And while I strongly support Christian-based investment options (like Timothy Plan or Eventide, for example), the truth is that even many faith-aligned mutual funds or ETFs can contain indirect exposure to companies or industries that may not fully reflect biblical values. Complete purity in investing is nearly impossible in a world where so many businesses are interconnected.

That said, the strategy I’ve laid out here is focused on long-term stability and diversification for retirement planning. It’s a practical foundation and not a perfect one. My goal is to help young investors build good habits early and take meaningful steps toward financial freedom. If you feel convicted to align your investments more closely with your values, I encourage you to do that prayerfully and intentionally. There’s no one-size-fits-all approach here—just a journey toward honoring God with what we've been entrusted to manage.

If you’d like to learn more about how to incorporate faith-based investing principles into your portfolio, check out my post: Faithful Investing: Aligning Your Portfolio With Your Christian Values

A Quick Disclaimer

This strategy reflects my personal investing approach based on my age, risk tolerance, and goals. While I believe in the long-term power of diversification, this strategy still carries market risk, and no returns are guaranteed.

Before investing in any of the funds mentioned here, do your own research and consider speaking with a licensed financial advisor to make sure your portfolio aligns with your financial plan, timeline, and personal comfort with risk.