An IRA ranks as a premier retirement investment account. Its tax-free growth and withdrawals pave the way for a solid nest egg. Hence, choosing and maintaining the right IRA investments over time is critical to meet future financial goals.
Maximizing yearly contributions is smart, but picking the right investments proves equally important. A large part of an investor’s IRA should be dedicated to stable, long-term investments, but incorporating some growth is also crucial. Tax benefits from certain IRA accounts, especially Roth IRAs, result in significant long-term tax savings for investors aiming for substantial portfolio growth.
Now, here are three IRA investments that I believe are crucial for those keen to expand their growth holdings immediately.
Shopify (SHOP)
Today, Shopify (NYSE:SHOP) shares are on the rise as it wraps up the sale of Shopify Logistics to global platform Flexport. This strategic decision triggered a 6% jump in SHOP stock. Under the deal, Shopify will gain a 13% equity stake in Flexport, bolstering its current investment.
The 2022 focus was e-commerce fulfillment infrastructure investment. Now, the tide is turning towards trimming those expenses. Big players like Amazon (NASDAQ:AMZN) and Wayfair (NYSE:W) are keenly pursuing cost reduction. In step with this, Shopify drew eyes from Wall Street in May by declaring its departure from the logistics field to center on its core marketplace platform.
Projected to boost profitability, Shopify’s exit from logistics presents more strong reasons to eye the stock. Amid steady sales volume growth, heightened international demand, and growing merchant reliance on Shopify’s services, the company displays appealing long-term prospects. Moreover, with the stock price remaining under $100 per share, it adds to its allure.
Zoom (ZM)
Although Zoom Video (NASDAQ:ZM), known as a pandemic stock, faced investor skepticism, it’s worth remembering it was profitable and yielded positive free cash flow pre and post-pandemic. Despite its stock sliding to 88.5% off its peak, the company still performs steadily.
While growth has slowed since the pandemic zenith, Zoom sustains stable sales and earnings. The first quarter witnessed a 3% revenue rise to $1.11 billion, while non-GAAP adjusted net income climbed 12% to $353 million.
Zoom, with a solid enterprise market presence and a push towards incorporating artificial intelligence, is set for steady growth. Thus, for those investors seeking undervalued, high-potential tech opportunities, Zoom makes an appealing portfolio addition.
Alibaba (BABA)
Alibaba (NYSE:BABA) is another key e-commerce player, focused on the Chinese market. The company outshines Amazon in the long run due to China’s larger and rapidly growing e-commerce market. China’s e-commerce sales are projected to surpass $1.4 trillion in 2023, while the U.S. market is expected to reach around $1 trillion. By 2027, China’s e-commerce market could be worth over $2.3 trillion, while the U.S. market is estimated to be around $1.5 trillion. Alibaba benefits from China’s massive market size and the prominence of e-commerce within the country.
Alibaba’s CEO, Daniel Zhang, highlighted two positive factors in the company’s recent quarterly update. Firstly, there are opportunities in China’s post-pandemic consumption recovery. Secondly, the rapid development of artificial intelligence is seen as a promising area. As China gradually recovers from the pandemic, consumer confidence is improving, which benefits Alibaba’s extensive e-commerce business in the country.
Alibaba is considering spinning off its Cloud and artificial intelligence business into a separate entity for an upcoming IPO. As part of this plan, job cuts are being implemented to enhance the value of that business arm. Although Alibaba shares won’t directly benefit from these lines of business, the company’s dominance in China’s e-commerce sector remains highly attractive.
On the date of publication, Chris MacDonald has a position in BABA, AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.