Our very own Sally Brandon, Senior Vice President of Client Service and Advice, tells U.S. News & World Report how rolling it over into an individual retirement account (IRA) can provide tax benefits and boost your retirement savings.
7 Best IRA Accounts for Your Investments
by Ellen Chang, July 23rd, 2019
The tax benefits of an IRA can boost your retirement savings.
Individual retirement accounts are a good option for growing your money in a tax-deferred account. Investing in a traditional or Roth IRA with low fees is crucial because the expenses can rack up over several decades. “First and foremost, invest in an IRA with low fees because any fees charged will directly lower an investor’s return,” says Stuart Michelson, a finance professor at Stetson University. An IRA provider with several low-cost mutual fund offerings is also crucial, says Derek Horstmeyer, an assistant finance professor at George Mason University. “You want to create a diversified set of mutual fund holdings even in your IRA,” he says. Here are the seven best IRA accounts for your investments.
One of the most popular providers is Vanguard since the retirement provider is known for its inexpensive expense ratios and low-cost index funds and exchange-traded funds. Investors can open an IRA for a minimum of $1,000. The company provides access to commission-free trading on 1,800 ETFs and no transaction fees on more than 140 Vanguard mutual funds. “For those beginning to save for retirement, I recommend opening up an IRA at Vanguard,” says Sally Brandon, Senior Vice President of Client Service and Advice at Rebalance. “As you change jobs, roll over your 401(k) into your existing IRA so your assets are consolidated and in the same investment strategy.”
Fidelity is another large retirement provider and helpful for newer and younger investors. The company does not charge an account fee and does not have a minimum amount to open an account, but the catch is that some Fidelity mutual funds have minimum investment requirements. A beginning investor benefits from investing in index mutual funds, diversification of assets, ease of use and low cost, Michelson says. Retirement providers offering those benefits include Vanguard, Fidelity, TD Ameritrade and T. Rowe Price, he says. Investors who trade regularly can also use Fidelity and will pay a competitive commission of $4.95 a trade for stocks and ETFs.
Charles Schwab has options for beginning investors and active traders and provides a mobile app. The company has a free robo advisor, Schwab Intelligent Portfolios. It is a good option for people who have less than $100,000 in an IRA to buy low-cost ETFs, Brandon says. “Regardless of your investment approach, make sure that your fees, including the advisor’s fee and the fund fees, are below 1%,” she says. Schwab’s robo advisor automatically builds, monitors and rebalances a low-cost diversified portfolio, says Chris Osmond, chief investment officer at Prime Capital Investment Advisors. “This is a great option for novice investors looking for an easy button to push,” he says.
T. Rowe Price
T. Rowe Price’s brokerage accounts can offer investors access to low-cost, actively managed mutual funds without any loads, commissions, or sales charges as well the option of commission-free ETFs. On mutual fund accounts, an annual account service fee of $20 is charged to accounts with less than a $10,000 balance. The minimum amount to open an IRA account is $1,000. “The custodian of the account doesn’t matter in most cases if you are considering the top 20 or so IRA providers,” Horstmeyer says. But the fees for buying and selling stocks and ETF are steep at $19.95 a trade. The fees are slightly less at $9.95 for traders who make over 30 trades in the prior 12 months or for those with more than $250,000 invested.
E-Trade is a brokerage firm but also provides retirement options such as IRAs. The company offers many of the same features as the other IRA providers, such as not having an account minimum for IRAs. The company also has a robo product called Core Portfolios that is an automated way to invest in the market with a diversified portfolio. The brokerage offers 250 commission-free ETFs from providers such as Vanguard and iShares along with access to no-load, no-transaction-fee mutual funds. The fees for buying and selling stocks, options and ETFs is relatively inexpensive at $6.95 for each trade or $4.95 for active traders who conduct 30 trades per quarter.
TD Ameritrade is another major brokerage firm and offers several IRA options. The company advertises access to more than 550 commission-free ETFs from leading providers, such as iShares and SPDR. For more advanced traders, TD Ameritrade allows investors to trade options and futures within the IRA. The fee to trade stocks matches the company’s competitors – TD Ameritrade charges a $6.95 flat-rate commission. “For those investors with the expertise to select and manage their own portfolio of stocks and bonds, investment firms such as Schwab, Fidelity, Vanguard, TD Ameritrade, Merrill Edge and E-Trade offer low-cost investing and portfolio management,” Michelson says. TD Ameritrade offers several educational tools about investing and retirement.
Betterment is a robo advisor that automatically chooses investments and rebalances a portfolio. Investors who do not want to choose between mutual funds, ETFs and stocks and analyze them often opt for a robo advisor. The company does not charge trading fees; its management fee is 0.25% for an account with no minimum balance. Investors who have at least $100,000 in their account can enroll in the premium plan for a 0.4% management fee, which involves phone access to certified financial planners. “Robo advisors give investors access to digital platforms that provide algorithm-driven and automated investment management that utilize all passive or index investing, so the underlying cost of the investments is fairly inexpensive,” Osmond says.
This article was originally published in U.S. News & World Report on July 23rd, 2019