Personal Investing, IRAs, and ETFs

• Author: Jenny Wolff
• Posted: 2025-10-28

Although 2022 was a rough year for the stock market, personal investment options grew stronger. Most people are still putting their money into employee-provided 401(k) accounts, but Individual Retirement Accounts (IRAs) are gaining ground.

As part of IRA investment, Exchange Traded Funds (ETFs) have become an attractive option for personal investors. Deciding on whether to invest in an IRA and the types of investments within them will require some research.
 

Personal Investing and IRAs

From 2022 to 2023, Generation Z has led the way in investing in IRAs, and Millenials have increasingly moved toward them. Younger workers are increasingly finding this form of personal investment appealing.

An IRA allows people to invest money in a tax-deferred or tax-free account, depending on the account.

Traditional IRAs are set up on a tax-deferred basis where individual investors can place up to $6,500 in 2023. Roth IRAs are tax-free accounts because they are funded with income that has already been taxed. Those under age 50 can save up to $6,500, and $7,500 if age 50 and above, in these accounts.

A third option is called a Simplified employee pension (SEP) IRA. These are tax-deferred accounts that self-employed individuals or business owners can set up.

Many people are finding IRAs more appealing because of the range of investment options available compared with employer retirement plans like 401(k)s.

Most IRA accounts allow individuals to choose from mutual funds, stocks, bonds, annuities, and unit investment trusts (UITs). Individual investors can also turn to real experts or robo-advisors to help guide them.

IRAs have a few exclusions, such as not holding collectible artwork or life insurance in the account, but offer a broad range of choices that investors have found attractive.

In early 2023, Charles Schwab IRA was ranked best overall, while Fidelity Investments IRA was listed as best for beginner investors.
 

How to Invest in an IRA

Once someone has selected an IRA account, the next step is determining what investments to choose. Investors need to think about asset allocation.

Asset allocation is how an investor divides up their money among different investments. Overall, that could mean dividing between a mix of stocks and bonds. For example, if an individual invests $10,000 in an IRA account, the mix might be 60/40, with $6,000 in stock funds and $4,000 in bond funds.

Investors need to spend time understanding their risk tolerance and how comfortable they are with stock market volatility, especially from 2022 to 2023.

One approach is to fill out an IRA with individual stock and bond selections. However, most investment advisors do not recommend this approach since it takes much time and effort to understand this route of investment.

A more popular approach is to invest in mutual funds and index funds. These funds allow individuals to buy into a range of investments instead of one company’s stock.

One recommendation from experts is to invest in large-cap (short for capitalization) funds with large U.S. companies. This selection tends to have solid positive earnings in the long term.

Then, an individual could invest in such areas as international stock and developing market funds.

Exchange Traded Funds (ETFs) are also an increasingly popular investment choice for personal investors.
 

Personal Investing and ETFs

Investment in ETFs grew by about 8% last year. This growth was not as high as in 2021 but still shows that individuals are increasingly selecting ETFs, even with a volatile stock market.

ETFs have become popular because they are a flexible and convenient form of investment. ETFs are different from mutual funds because they are traded through the market day on public stock exchanges.

Personal investing in ETFs can be done through individual accounts like IRAs or through a smartphone application. So, they offer increased flexibility.

Investors looking for less risk in 2023 may look to such ETFs as the Vanguard Long-Term Bond ETF. This ETF places about 44% of the investments in government bonds and has a low expense ratio.

Those personal investors interested in more growth could review the Vanguard Small-Cap Value ETF. Although small-cap stocks tend to be more volatile than large-cap ones, this ETF allows investors to buy over 800 value stocks to spread out the risk, and it has a low expense ratio.
 

IRAs, ETFs, and Personal Investing

Whether investing in IRAs or ETFs, each investor needs to consider their risk tolerance and best asset allocation for their situation. To find out more about personal investing in 2023, visit FlourishDaily. IRAs and ETFs could be a good starting point.