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A Portfolio for Retirement Savers
by Kimberly Lankford

My wife and I are trying to determine the best choice for her Roth IRA. We are 35 years old and willing to accept some risk over the long term, and we want to diversify our retirement savings. I have read and re-read the 25 best funds articles in your magazine and would like to use some of those funds for the Roth. Any suggestions?

Take a look at our suggested long-term portfolio, which is a great combination of funds for anyone who is at least six years away from retirement or ten years from another goal, such as college tuition. (Sample short- and medium-term portfolios are also available.)

This entire portfolio is invested in stock funds, but it's still diversified -- some of the funds invest in large companies, others focus on small companies or foreign firms, and some specialize in growth stocks while others pick value stocks from companies whose stock prices have been beaten down and may be poised for a comeback. This diversification should smooth out some of the bumpiness through time.

The downside to our recommended portfolio, however, is that each fund has minimum investment requirements (generally $1,000 or more to get started) so most people will need $20,000 to be able to invest in all of these stocks at the proportions we've recommended. The investment minimums are usually lower for retirement accounts, so you'll only need $10,000 to replicate this portfolio in a Roth.

But don't let that scare you off. If you only have a few thousand dollars to invest now, start by investing in one or two of the funds we've recommended and gradually build your portfolio over time. Here's the order you should shoot for: start with Oakmark fund, then add Masters', followed by Legg Mason Opportunity, Century Small Cap Select, TCW and finally Third Avenue.

For more advice on building a portfolio, see our tutorial on Growing a Fund Portfolio. For details about each of the funds in our long-term portfolio (and our other favorite funds), see The Best 25 Funds.