An individual retirement account (IRA) is a retirement account that allows you to save for the future on either a tax-deferred or tax-free plan.
Open an IRA and it’s a great way to help build wealth and watch your money grow, especially if your employer does not offer a 401(k) program, you are self-employed or you’re a younger investor. Read on for a crash-course in IRAs and saving for retirement.
Best IRA Accounts:
- Best Overall for IRA Accounts: TD Ameritrade
- Best for Starting an IRA: Ally Invest
- Best for Commission-free Trading: E-Trade
- Best Robo-advisor for an IRA: Betterment or Wealthfront
- Best for Buy-and-hold Investors: Vanguard
1. Best Overall for IRA Accounts: TD Ameritrade
TD Ameritrade is perfect for every sill level, as there’s a $0 required minimum balance. TD Ameritrade offers in-depth, yet easy-to-understand research and investment advice.
The company also offers a number of customer service options, including 24/7 phone support, email, text, Facebook messenger support, and local branch advising options.
The investing giant also offers a massive range of investment options, with 300 commission-free ETFs and over 4,000 no-fee mutual funds.
One of TD Ameritrade’s most unique functions is its brokerage boot camp—you can choose a trading level (rookie, intermediate, or expert) and TD Ameritrade’s platform will redirect you to investing research, articles, quizzes, and videos on better retirement planning tactics.
2. Best for Starting an IRA: Ally Invest
Ally Invest’s comprehensive suite of investment planning tools now rivals most major online brokers.
Like TD Ameritrade, Ally Invest comes with $0 account minimums, which can make it an appealing option for newer investors.
However, the IRA provider falls short when it comes to investing in mutual funds. Ally Invest offers no commission-free mutual fund investments, and you’ll need to pay a $9.95 commission on each mutual fund investment, meaning that Ally Invest is a good choice for the active trader. But Ally does offer a plethora of commission-free ETFs to make up for it.
If you’re looking to stick your money into a mutual fund, you’re better off choosing another IRA provider.
3. Best for Commission-free TradingL E*TRADE
You probably already know about E-Trade for its intuitive stock buying program, but the company also offers an impressive range of mutual funds (over 150) and a massive range of NTFs (over 4,000).
E-Trade’s most unique option is its library of retirement planning advice, news stories, and how-to articles that can be useful to novice investors and seasoned traders alike.
If you’re looking to place your retirement funds into commission-free ETFs, E-Trade is a great option that offers mobile compatible support, plenty of data and research options and a $0 account minimum for IRAs.
4. Best Robo-advisor for an IRA: Betterment
Centered around goal-based saving, Betterment is a great choice for hands-off investors who want to learn more about how to save for retirement. Betterment supports traditional, Roth, and rollover IRAs, which are IRAs originating from your old employer-sponsored 401(k) and offers automatic tax-loss harvesting on all accounts.
When you create an account with Betterment, you’ll be guided through goal-setting exercises to help you analyze your finances and lifestyle to create a reliable and sustainable plan to grow your money for retirement. You can even set up auto-deposits to keep you on track to meet your short- and long-term goals.
Betterment’s RetireGuide offers IRA holders a personal picture of all of your savings, including on non-Betterment accounts, and offers tips and advice on saving and estimated retirement dates. Betterment is best if you’re a hands-off investor who prefers to have automation help you build your IRA.
5. Runner-up for Best Robo-advisor for an IRA: Wealthfront
Wealthfront is another great robo-advisor investment platform. Instead of an expensive personal financial advisor, Wealthfront’s team of algorithms analyze the market and make recommendations on where to invest based upon your capital, age and risk tolerance.
After you open an account with Wealthfront (there is a small $500 minimum account balance), the system’s robo-advisors will allot your money into a diversified range of ETFs.
Traditional, Roth, and rollover IRAs included, Wealthfront is best used by investors who aren’t interested in managing their own retirement account but who don’t want to deal with the high fees and minimums that come along with hiring a financial advisor.
6. Best for Buy-and-hold Investors: Vanguard
With over $3 trillion in managed assets, Vanguard is one of the largest IRA providers in the world. Vanguard’s standout features are its low-cost mutual funds and high-performing ETFs.
Investors can open an account with as little as $1,000, but many of the most popular funds (including the cornerstone Vanguard S&P 500) require an initial investment of $3,000. Though Vanguard may forgo the $0 minimum account balance offered by competitors, the company more than makes up for it with attentive customer service (with extended phone and chat hours) and a massive range of index funds.
Vanguard’s traditional and Roth IRA plans are best utilized if you’re a buy-and-hold investor who has a bit of cash saved up to open an account.
Now, Follow Through!
If you made it through all that technical jargon, good job. It’s even more essential that you read, digest this information, and actually do it.
Maybe this will motivate you (nothing motivates some people more than a compound interest table).
Check out what $100 per month can do for you at a rate of 12 percent (now, I know that 12 percent is quite high, but the concept is still the same, whether your rate is eight percent or ten.)
|5 years||$8,167||30 years||$349,496|
|10 years||$23,004||35 years||$643,096|
|15 years||$49,958||40 years||$1,176,477|
|20 years||$98,926||45 years||$2,145,469|
|25 years||$187,885||50 years||$3,905,864|
If your employer doesn’t offer you a retirement plan, it takes even that much more initiative to open up your own IRA. If you can’t decide, it’s better to just choose a fund, already!
One last tidbit: Don’t sign up for a particular retirement plan just because your next-door cubicle neighbor Joe signed up for the same one. Your situation may be completely different from Joe’s (not to mention, if you’re 20 years younger than Joe, your portfolio should look much different).
That’s why assistance is available and you should take advantage of it, and with those three brokerages at your disposal, you won’t miss a beat.
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