Many people are blessed to have access to a retirement plan at their job. This could be a 401(k), 403(b), or the TSP. But many people can also benefit from using an IRA or Roth IRA.
There are many pros and cons to think about when comparing the employer sponsored plans versus IRAs but I will leave that comparison for another conversation. Today I’m going to focus on those that have decided that an IRA makes sense for them and are wondering where is the best place to open one. There are numerous choices online and it can often be difficult to sort them all out.
One of the biggest things that you need to watch out for when investing in an IRA is the fees that you pay. Fees can be in the form of transaction fees or management fees. Some investment options are much more expensive than others.
Fees are not bad all the time but it is important to ask what you are getting for the fee you are paying.
Fidelity Investments is a great place to start an IRA because their index funds are very low-fee or even zero-fee. There is not a minimum deposit required to open a retirement account at Fidelity.
Vanguard is also a great option if you’re looking for a low cost IRA. Vanguard is considered the pioneer in low-cost index funds and has continued to be a leader in that space ever since.
If you’re looking for an institution where you can do more than invest in an IRA, Schwab may make sense for you. With checking and savings accounts you can bank there as well. Schwab has very competitive fees and unlike other institutions, does not restrict your investment choices to funds that they own.
Betterment is a robo advisor which means that they use computer algorithms to build the portfolios that you’d be investing in. Betterment is very good at keeping investing simple. Once you input information about you such as your age and when you expect to need the money, Betterment designs a portfolio for you. The downside however, is that betterment charges to .25% to provide this service.
Dallen Haws is an investment advisor for Haws Financial Planning