Setting up your first IRA is the best move you can make to start on the path to a secure and comfortable retirement. But with all the risk in the stock market today, how can you pick the stocks that are most likely to bring you wealth and prosperity in the decades between now and when you retire?

Getting past the first road block
Actually, if you've decided that you need to buy stocks in order to build your wealth over the long run, you're already well ahead of many investors. Right now, plenty of people are still huddled on the investing sidelines, accepting near-zero returns for the safety of no-risk investments like Treasury bills. But while the losses of the past year serve as a stark reminder that stocks have plenty of risk, they also bring the promise of huge rewards for long-term investors, with returns you can't afford to pass up.

Of course, your first investment definitely won't be your last. You don't have to make the perfect choice your first time around -- and you should expect to make plenty of mistakes as you learn the ropes of investing. So, don't let the pressure of trying to find the perfect first stock scare you so much that you never pull the trigger at all.

3 great traits of stocks in IRAs
I'm a big fan of letting younger investors swing for the fences with their first IRA contributions, as long as they have the temperament for it. Although you don't want to throw your money away, making mistakes when you're young can be a lot less costly than when you have more money at stake -- and the experience you gain from stretching your horizons is worth even more than whatever returns you earn on that first stock.

So, with that in mind, these are three attractive traits of great stocks for your first IRA:

  • Growth potential. The best thing about an IRA is that your money grows on a tax-deferred basis. And if you have a Roth IRA, you won't ever have to pay tax on those gains -- even when you take money out of the account during retirement. So, especially if you're just starting out, it's well worth the risk to take some chances with an ambitious selection of growth stocks.
  • Good value. Even though good stocks are worth paying for, you never want to pay too high a price to invest in a company. You won't have to worry about overvalued stocks nearly as much since the bear market smackdown, but if a stock price already assumes that a company will grow at an astronomical rate, you have little upside but lots of downside risk if the business disappoints.
  • Strong financials. In a weak economy, companies have to stay healthier than they do during good times. Things like low debt levels or the ability to pay dividends can act as indicators that a stock will survive through whenever the recovery comes.

You won't see all of these traits in very many stocks. Often, the best growth candidates sport sky-high valuations, while you may find the best values in unloved companies with can produce big gains for shareholders just by holding their own in tough business conditions.

So, you've got two choices. Even using fairly simplistic financial measures like past growth rates and price-to-earnings ratios, you can find stocks that make a reasonable showing in all three of those areas. Here's a sampling I found after a quick look that you may want to look into further:


5-Year Growth Rate (Annual)

P/E Ratio

Dividend Yield

BHP Billiton (NYSE:BHP)








Enbridge (NYSE:ENB)












Nokia (NYSE:NOK)








Source: Yahoo! Finance.

Alternatively, you can seek out the very top stocks in each of these categories and then mix and match to create an all-inclusive portfolio. So, you may end up with the best growth stocks, the top value stocks, and strong dividend-payers -- all in one IRA.

Now's a great time to start
When stocks have fallen as much as they already have, just opening an IRA in the first place represents a courageous step. Once you take the next step and find great stocks to invest in, you'll be well on your way to the future you've always dreamed of.

Learn more about retiring wealthy:

Get help on opening and investing your IRA from the Fool's Rule Your Retirement newsletter. Each month, Foolish retirement expert Robert Brokamp shares his experience and insight with subscribers. Click here now to take advantage of our free 30-day trial offer.

Fool contributor Dan Caplinger passed up buying AOL for his first IRA and still regrets the error. He doesn't own shares of the companies mentioned in this article. CNOOC and Garmin are Motley Fool Global Gains recommendations. Nokia is a Motley Fool Inside Value pick. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy gives you all the best.