One of my goals for 2021 was to open a Roth IRA. One of the main advantages of the Roth IRA is your money can grow tax free and you do not pay taxes on the withdrawals (for the most part) in retirement at age 59 1/2. Also, contributions (not earnings) can be withdrawn at any time without penalty. This means a Roth IRA can be used as an emergency fund, though it is not recommended to make withdrawals because it will negatively impact the compounding effect of your money.
The Roth IRA has been opened, funded and money invested. While I only funded the account with $200, it is a start. The account is heavily waited toward REITs (Real Estate Investment Trust). I did this to take advantage of the tax benefits of the Roth IRA.
My first holding is American Tower Corp. (AMT). It is a large global REIT in the communications sector. At the time of this writing it has a dividend yield of 2.12% according to the website trackyourdividends.com. My next holding is Crown Castle International Corp. (CCI) with a dividend yield of 3.51%. This is a REIT that owns cell towers and miles of fiber. I am bullish on these two REITs due to the trend of 5G. Digital Realty Trust (DLR) is my next holding. DLR is a data center REIT that should benefit from the surge in cloud computing. It has a dividend yield 3.39%. Next is Innovative Industrial Properties (IIPR). This is a specialized REIT that focuses on properties in the cannabis sector. It has a dividend yield of 2.61%. Main Street Capital (MAIN) is the next holding in my Roth IRA. MAIN is a private equity firm that specializes in lower middle market companies. It has a dividend yield of 7.81%. Medical Properties Trust (MPW) is the next holding in my Roth IRA. This REIT specializes in properties in the medical field including hospitals. The dividend yield for MPW is 5.14%. Philip Morris International (PM) is a consumer staple company in the tobacco industry outside of the United States. PM is best known for the Marlboro cigarette brand. It has a dividend yield of 5.82%. Stag Industrial (STAG) is a REIT that focuses on industrial properties such as warehouses. It has a dividend yield of 4.76%. Store Capital (STOR) is a net-lease REIT that has a lot of exposure to retail. It pays a dividend yield of 4.44%. The last position in my Roth IRA is Wells Fargo (WFC). Wells Fargo is one of the largest banks in the United States. It has been hit hard by scandals recently which has driven down the stock price. The Fed has put restrictions on WFC which led to a recent cut in its dividend which now yields around 1.3%. I believe that WFC is making the changes necessary to recover from the scandals and should provide growth in the stock price and dividend in the future.
This account is heavily weighted toward real estate and does not have a lot of diversity which could present some risk if the real estate market does poorly. My Roth IRA is just a small fraction of my retirement savings. The bulk of my retirement savings is in a traditional IRA which has over 50 holdings. I also have a 401k through my workplace. So while my Roth IRA is not diverse, my overall combined portfolio is diversified. I am excited to add a Roth IRA to my portfolio. This is another step on my journey to financial freedom.
*Disclaimer – I am not a financial professional. The information shared here should not be considered financial advice. I am just a factory worker sharing my experience as I strive to achieve financial freedom. Before investing or making any financial decision do your own research and due diligence and consider seeking the advice of a financial and/or tax professional.