Preparing for retirement in a Roth IRA offers unique tax advantages for the future, but unlike bank accounts and CDs, they don't offer a fixed interest rate. Instead, the investments you choose to include determine your Roth IRA return and how the account grows over time.
What is the average Roth IRA interest rate?
There isn't an average Roth IRA interest rate because Roth IRAs aren't investments. These accounts also don't pay or earn interest.
What helps your Roth IRA return rate — in other words, helps the value of the account grow — are the investments held within the account. Historically, the annual stock market return has been 10%, or about 6% to 7% after inflation. Depending on your investment choices, you may be able to earn that 6% to 7%, or potentially more. You may also earn less or lose money.
How to earn a Roth IRA return
How much interest a Roth IRA returns depends on the investments within the account and their year-to-year performance. For that reason, wondering what the interest rate is on a Roth IRA isn't quite accurate — it all depends on your choices and risk preference.
Two factors affect your Roth IRA return rate:
Investment types: If your Roth IRA is full of low-risk bonds, you may earn a lower, but potentially more consistent, return year to year. In contrast, if your Roth IRA is invested primarily in growth stocks, the risk is higher, but you may earn a higher return over a longer period.
Contributions. Adding an influx of cash regularly to your account can help the account grow through compounding interest. The Roth IRA annual contribution limit is $7,500 for 2026 ($8,600 if aged 50 and older).
For example, if you open a Roth IRA and fund it with $7,500 each year for 10 years, and your investments earn 6% annually, you may end up with more than $99,000 by the end of the decade.
If, however, you didn't invest your money or didn't put it in the bank, you'd have just $75,000, which is simply each year’s contribution multiplied by 10, with no investment return. In fact, the purchasing power of that balance will be dimmed by inflation.
You’ll make the most of the Roth IRA’s tax advantages when you retire. You pay taxes on your contributions before they go into your account. Your contributions and earnings grow tax-free, and qualified withdrawals after age 59 ½ are tax-free, as well.
» Calculate how contributions might grow with our Roth IRA calculator
🤓 Nerdy Tip
The return you earn in any investment account, not just a Roth IRA, is highly dependent on the stock market. Given that the market fluctuates daily, both gains and losses are never guaranteed. However, investing with a well-diversified portfolio can help you safeguard your potential earnings from risk. 
How to invest with a Roth IRA
The idea that a Roth IRA is just a vessel for your investments doesn’t mean that all Roth IRAs are created equal. Where you open your Roth IRA has a big effect on the investments you’re able to access. In addition, the fees you pay for maintaining the account and purchasing those investments may vary widely.
If you want access to the widest range of investments, consider opening your IRA at a broker. There, you can manage your account yourself, picking and choosing investments based on your goals and risk tolerance. Most brokers will offer access to individual stocks, bonds — some of which do pay a fixed interest rate — and mutual funds, including index funds and exchange-traded funds.
Banks also offer IRAs, but the investment options within bank IRAs are typically limited to savings accounts or certificates of deposit.
If you’d rather be hands-off and don’t mind a more limited investment selection, you can open a Roth IRA at a robo-advisor. These computer-aided investment services will manage your account for you, building a portfolio that aligns with your goals and adjusting it as needed. Most robo-advisors use index funds or ETFs.
Below are some of NerdWallet's picks for the best robo-advisor:
| Account type | Broker | Cost* | IRA match |
|---|---|---|---|
| Robo-advisor |
| None. | |
| None. | ||
| None. | ||
| Self-directed |
| 1% match on eligible contributions up to IRA limits. | |
| None. | ||
| 1% match on rollovers and contributions. | ||
| *Self-directed investing typically has lower costs because investors manage their own portfolios, while robo-advisors are automated investing services that use data and algorithms to build and manage investment portfolios. | |||
» Want to compare more Roth IRA providers? Get started with our top picks for best Roth IRA accounts.
Watch out for Roth IRA fees
No matter where you open your Roth IRA, you’ll likely want to pay attention to costs. At a broker, you might pay transaction fees to buy and sell investments, and there are annual fees — called expense ratios — for the mutual funds you choose.
For robo-advisor management, you may have to pay an annual fee plus the cost of the expense ratios of the funds the advisor chooses for your portfolio.
All of these costs can reduce your overall investment return because every dollar you pay in fees is a dollar that doesn’t go into your investment.
» Check your potential returns with our investment calculator.
Explore more on
