Choosing The Best IRA Accounts

It can be nerve-racking to open up an individual retirement account for the first time. 401K’s are sponsored by Companies for their employees, but IRA’s must be opened individually.

Finding the best IRA account is really dependent on your individual needs for retirement. It can be daunting to decide which is best for you, but we’ll examine the different available options to help you make the best possible choice.

Opening an IRA

IRA’s can be opened at banks, automated investing services, mutual fund companies, and brokerage firms. There are certain advantages to each particular IRA.

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Banks

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This is a good option for those who would like to invest in certificates of deposit. A CD is a type of savings tool which is practically risk free and provides a decent return on your money. This is in exchange for holding your money there for a set period of time without withdrawing it.

Automated Investing Services

If you want to invest in bonds and stocks, but would like a service to do most of the work for you, then this is the best choice.

Mutual Fund Companies

This is suitable for those who want to invest in exchange traded funds (ETF’s) or mutual funds from one company.

Broker

This is an ideal solution if you want to invest in stocks or exchange traded funds.

The Best Accounts From Each Category

Banks

There are numerous Banks which offer IRA’s with security of certificate deposits. CD’s are FDIC insured and rates are currently at an all time low.

Here are some popular options for this category

Ally: Ally provides high return IRA CD’s. They also offer a $500 bonus on newly opened IRA accounts, depending on the amount of the initial deposit.

Everbank: Offering a unique selection of CD options, Everbank also guarantees the returns will be nationally in the top 5%. Their most popular CD options are precious metals and foreign currencies.

Bank of America: With various types of IRA’s, this bank also offers risk free CD’s and money market services. Their short term CD’s offer a term of 12 months and a steady growth of .07%. With no annual fees or transfer fees, a minimum deposit of $10,000 is required. Their standard term CD allows for a smaller investment at a minimum of $1,000. The range of growth is 0.03% to 0.15% annually depending on the amount and term.

Automated Investing Services

These companies do exactly as their name suggests, automating the process of investing. Also known as Robo-advisers, they manage investment selection, re-balancing, and portfolio allocation.

Here are some popular options for this category

Wealthfront: By assessing your risk tolerance, Wealthfront builds a portfolio specifically accommodated for you. It also allocates assets in commodities, investment trusts, and high dividend yield ETF’s. The fee is 0.25% along with the price of the exchange traded funds. A $5,000 minimum is required to open an account.

Betterment: This company offers unique tools which track your investments and help them grow. The cost for their services range from 0.15% to 0.35%. No minimum deposit is required to open an account. Betterment strives to provide optimal returns on your investment and claims to generate 2.9% higher returns than a typical investor.

WiseBanyan: A new Robo-advisor which offers something completely unique- it’s free! WiseBanyan offers asset allocation at no additional cost, while making their money by selling addons to their services. Each portfolio is personalized to maximize after tax investment returns. Everything is automated from investing funds, monitoring the growth, and reinvesting the dividends.

Mutual Fund Companies

A mutual fund company is a good solution for those interested in a single type of fund. Additionally, many of these companies offer brokerage services as well.

Here are some popular options for this category

Fidelity: Truly one of the best IRA companies, Fidelity is one of the largest investment companies in the world. There are no fees to manage a Fidelity IRA and no required minimum deposit. Offering up to 175 of it’s own no-load mutual funds, Fidelity also offers commission free trades on many different ETF’s. Additionally, when trading stocks with Fidelity there is a commission of $7.95 per trade.

Vanguard: Well known for their low cost mutual funds and exchange traded funds, Vanguard manages more than 2.4 trillion dollars in investments. They also have mutual funds available for a wide range of different asset allocations. Investing in your retirement is as simple as buying a single mutual fund with their target date retirement funds. They then split this investment over four different funds – U.S. Bonds, international bonds, U.S. equities, and international equities. Not only that, but opening an IRA with them is free.

American Funds: This company specializes in funds with varying asset types and volatility levels. Funds include tax exempt bonds, equity income, and growth bonds. There is a one time setup fee of $10 per social security number.

Brokers

Here are some popular options for this category

Online Brokers are suitable for those who need a wide range of stocks or exchange traded funds. The best IRA accounts in this category offer IRA’s with low or no setup fee, and very low cost on trades.

TD Ameritrade: With more than 100 commission free trades on ETF’s, TD Ameritrade is a prominent option for IRA’s. There’s also no setup fees, maintenance fees, or minimum initial investments.

Scottrade: Like TD Ameritrade there’s also no extraneous fees. But there is a required amount of $500 to open an IRA. However they offer stock and ETF trades for $7, and offer more than 3,000 mutual funds which are commission free.

Charles Schwab: With varying options on different IRA’s such as Traditional, Roth, and roll over, Charles Schwab also conveniently manages other services online. It costs nothing to open an IRA, and there are no costs in maintenance fees. But the minimum initial investment must be at least $1,000. Commissions are $4.95 per online equity trade. Charles Schwab also offers an impressive amount of index funds with a low minimum investment of $100.

As you can see there are a wide range of IRAs to choose from. Knowing which accounts offer special features or unique options can help you make a decision in choosing the one which is right for you.

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