Roth IRA has rapidly become one of the best retirement solutions offered by the government. This, as you know well, is because of the tax-free withdrawal feature of Roth IRA where you get not only all your contributions but also all the earnings on the money tax-free, once you are past age sixty. Managing your Roth IRA in the best possible fashion is thus in your best interest. Let us analyze the practices of the best Roth IRA manager that there could be.

Fundamentally, managing a Roth IRA account is no different than managing any other stock/bond market account - though you do have an advantage over 401(k) accounts, where your choices are limited by what your firm offers. Thus, as the first best practice for a Roth IRA manager, you should open an account with a discount brokerage firm such as Interactive Brokers, E-Trade and others where you have access to a wide variety of stocks, bonds and mutual funds - and which don't charge you for insufficient trading, or need a large minimum amount in your account.

The second best practice for a great Roth IRA manager is to maximize contributions as soon as you can in any given year. Of course we are assuming here that your income is below the maximum limit for Roth IRA contributions for that year. Putting your money in early gives it more time to participate in growth.

Now we come to choosing stocks, bonds and other asset allocation techniques for the Roth IRA portfolio. Portfolio management can be done at the Roth IRA account level, or better yet, at your overall portfolio level (counting all of your investments). If done at your overall portfolio level, the best practice for a Roth IRA manager is to treat the Roth IRA as the most aggressive portion of the portfolio. This is because the annual tax consequences are zero, and individual trades do not have to be reported in your tax returns (which simplifies tax keeping significantly).

Thus assuming that you are going to make your Roth IRA aggressive, where should you invest? Here, you have multiple choices. You could go with a value oriented mutual fund such as Dodge & Cox, which gives you diversification and long-term market beating performance, or pick your own stocks. Picking your own stocks, while attractive, is fraught with all types of risks - unless you are being guided by a firm hand. For this, we recommend some of the best newsletters in this business in our Investment Newsletters department.

After selecting strong stocks, and getting good buy and sell recommendations, the best practice for a great Roth IRA manager is to take large positions to make a significant difference to the stock portfolio. For example, a stock purchase of $1000 that doubles in value will only yield an additional $1000 for you. A $10,000 position would, on the other hand, add an additional $10,000 to your portfolio. Thus, once you are sure about a recommendation, take a large position.

And finally, let your winners run and winnow out your losing positions. Following these simple measures, you will yourself be the best Roth IRA manager there is.