An individual retirement account (IRA) is a tax-advantaged retirement account that helps people to save for later in life. Traditional IRAs mimic the structure of a 401(k): You contribute pre-tax earnings into the account and only pay taxes on what is withdrawn during your retirement. Contributions to Roth IRAs are made with after-tax earnings but are not taxed when money is withdrawn. However you choose to structure your retirement account, an IRA is often a good option. Consider working with a financial advisor as you create or adjust your IRAs to make sure you’re optimizing the amount you’re investing.
Here are five places, in no particular order, to consider when opening an IRA. This list isn’t exhaustive; it’s simply intended as an introduction to some of the good choices currently available.
1. Vanguard
Vanguard can be an outstanding choice for investors who want to emphasize low-cost mutual funds.
This firm is generally recognized as the leader in mutual funds and related investment products, and they haven’t rested on their laurels. Vanguard offers one of the largest, most comprehensive lists of no-fee funds of any brokerage on the market, advertising several thousand no-fee products, and they generally perform quite well relative to the market at large. Investors who want to build an IRA that emphasizes mutual funds should potentially consider Vanguard.
That said, investors should take note that Vanguard can have a relatively high entrance fee. Many of its products require investments of between $1,000 and $3,000 to buy in. While this may not be a problem for someone moving money around within their IRA, it isn’t necessarily the best choice for someone looking to set up an initial account.
2. Betterment
One of the most exciting developments in modern investing has been the rise of the robo-advisor. When using a rob-advisor, you don’t make any of the trades yourself. Instead, the firm builds and manages a portfolio based on its algorithms and weighted trading strategies.
How your assets are invested often depends on your expressed goals, risk tolerance and timeline. The system builds a portfolio based on those metrics and manages it for you. Betterment offers a good price, with a general 0.25% commission. While it offers a premium product for 0.15%, it’s unlikely that most users will need that. There is a $100,000 minimum balance requirement for Betterment’s premium offering.
Given how rare it is for active traders to beat the market, this kind of indexed, long-term trading strategy may serve many investors quite well. And Betterment is one of the best.
3. Merrill Lynch
But maybe you don’t want to deal with a automated platform. In that case, Merrill Lynch (and its online product Merrill Edge) might be the right pick for you.
Merrill, a subsidiary of Bank of America, provides a robust selection of investment packages tailored for individuals looking to build their own IRAs and portfolios. Whether you’re interested in a fund-based strategy, investing in stocks or leveraging specialized IRA-focused products, Merrill offers a variety of compelling options. However, their standout feature lies in their retail offerings.
Unlike many financial institutions, Merrill distinguishes itself with a strong in-person presence, supported by a vast network of offices and retail locations. Following its acquisition by Bank of America, Merrill expanded its physical footprint to between 2,500 and 3,000 locations across the country. This extensive network makes it convenient for investors seeking personalized guidance to find expert assistance in setting up and managing their IRAs.
In an industry increasingly dominated by algorithms and digital communication, Merrill’s commitment to face-to-face support offers a significant and refreshing advantage.
4. E*TRADE
Then there’s an option for investors who want to build and manage their IRA independently. In that case, you should consider E*TRADE.
E*TRADE is, for all intents and purposes, the original consumer-facing trading platform. It burst onto the scene more than 20 years ago and it still offers one of the best investment experiences online. This platform offers you some of the most sophisticated tools and one of the widest range of assets you’re likely to find anywhere. They have joined the race to the bottom in fees and now offer no-commission trading on many assets such as stocks and options contracts. And if you would like to learn more about how to manage your portfolio as you go, they offer a full suite of educational products.
All in all, if you’re looking for a hands-on IRA, this can be a good place to start.
5. J.P. Morgan Wealth Management
Opening an IRA with J.P. Morgan Wealth Management gives you flexible options to suit your investment style. You can manage the account independently, collaborate with their team of fiduciary advisors, or opt for personalized one-on-one guidance from a dedicated advisor who can oversee your IRA on your behalf.
J.P. Morgan Wealth Management provides commission-free trading and a diverse array of investment choices, including stocks, bonds, ETFs, mutual funds, and options. Additionally, the firm rewards new IRA funding or rollovers with cash bonuses. These bonuses range from $50 for deposits between $5,000 and $24,999 to $700 for contributions of $250,000 or more.
Bottom Line
If you’re looking for a fund-based IRA, Vanguard is among the most well-respected. Those who’d like to a DIY approach should check out E*TRADE, while those who want more help may want to consider Merrill Lynch or J.P. Morgan Wealth Management. Robo-advising is a popular option, and Betterment is one of the most popular among them.
Retirement Planning Tips
- Whichever company you choose to deal with, there’s no substitute for smart, customized financial advice. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- A quick – and free – way to see if you’ve got enough to retire is by using SmartAsset’s free retirement calculator.
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