Best IRA Investment Accounts: Save Early for Retirement

By | February 16, 2020

Before considering the best IRA accounts, let’s take a glimpse at what it’s all about.

Individual Retirement Accounts (IRA) – is a type of investment account that allows you to save money for your retirement in a tax-free way.

One good advantage you have in IRA over others is that you will not only choose the investment yourself; you can choose a trustee that will hold the plan for you, although different trustees provide different service levels.

So what are the types of Individual Retirement Accounts (IRA)?

  1. Rollover Individual Retirement Accounts (Rollover IRA) – This involves moving funds from an investment account into the traditional IRA account. Rollovers involve transferring assets that are eligible from an employer-sponsored plan, such as a 403(b) or 401(k), into an IRA.
  2. Traditional IRA – In this type, you make your contributions with the money you can deduct from your tax returns, and your earnings can grow potentially tax-deferred until you make your withdrawals during retirement. Most people who are retirees usually find themselves in a Lower tax bracket more than when they were in pre-retirement. The tax-deferral means that the money may be taxed at lower rates than usual.

Roth Individual Investment Accounts (Roth IRA)

In this kind of investment, you make your contributions with a fund that you have already paid taxes on (after-tax), and then your money may start growing tax-free, and you will be able to make your withdrawals without task during retirement so far you met the necessary conditions.

Below are some of the best IRA investment platforms to consider:

Ally Invest

If you are such an investor that’s very active in trading, then consider Ally Invest because it’s the best investment account for you. The average trading commission is around $4.95 for each trade in stocks, including options and ETF’s.

But if you happen to be a frequent trader, which is defined as a minimum of 30 trades in a quarter, with a minimum account balance of around $100,000 (a hundred thousand USD), the trading fee drops to $3.95. For someone who is very active in trading, this will improve your ROI (Return On Investment) substantially.

They always have a commission on mutual funds of around $9.95 for each trade on no-load funds. Theirs seems to be the lowest mutual fund fee anywhere. They have 24/7 customer support/care service.

You can trade FOREX, ETF’s, Bonds, Options, mutual funds and futures, including the necessary tools needed.

They offer very high-interest rates on their savings, certificates of deposits, and money markets. The account can be used as an IRA, or as a regular taxable account.

Pros to Open an Account with Ally Invest

  • It can be a tie in any Ally Bank, which offers some higher interest rates on savings products, including the very best auto loan programs available.
  • There’s no initial minimum investment required.
  • It has one of the lowest trading fees for mutual funds, at around $9.95 for each trade.

Cons to Open an Account with Ally Invest

  • It’s designed mainly for the high-frequency traders, and they seem to have lower educational resources.

Personal Capital

Personal Capital has dual plans. One is a free plan, while the other is a paid plan.

The paid version manages your investment account for you, and it’s okay if you don’t have experience in managing investments, while the free version provides valuable retirement plan tools that can help self-directed investors.

The paid version is called personal capital wealth, which doesn’t only manage your IRA account, but also manages your other investment accounts.

Here is the list of fees commonly paid to professional investment management services:

Fee schedule

  • $1,000,000 ($1 million) and below; 0.89 percent per year
  • $1,000,000 ($1 million to $3 million); 0.79 percent per year
  • $3,000,000 ($3 million to $5 million); 0.69 percent per year
  • $5,000,000 – $10,000,000 ($5 million to $10 million); 0.59 percent per year
  • Above $10,000,000 ($10 million); 0.49 percent per year

If you’re a self-directed investor, you may want to go for the free version. It offers a lot of great tools to help you manage your investment better than IRA, such as:

  • Retirement Planner:
    This is a  tool that helps you determine how much funds you will need to retire. This tool will help you set a target and let you know if you’ll be able to reach your target goal.
  • Asset Allocation target: This tool helps you analyze your asset allocation and it determines if you’re underweight or overweight in any of the leading asset categories.
  • The free version offers useful tools to investors who are self-directed, who may not need much investment management assistance.

Advantages of Personal Capital

  • If you happen to be the kind that has little or no investment experience, you may consider the wealth management version, because it handles all your IRA and the other investment accounts you own.

Disadvantages of Personal Capital

  • If you’re seeking an excellent IRA management service, Personal Capital seems to be more expensive than other investment platforms. The yearly fee of 0.89 percent on a portfolio less than $1 000,000 ($1 million) is higher than what most Robo-advisors charge.
  • Another main disadvantage of Personal Capital is that it requires a sum of $100,000 as startup capital for its wealth management version, which is quite at the detriment of small-scale investors.

E*TRADE

This platform has four in all managed investment options, which is the main reason it stands out as a right IRA account to choose. That leaves you with many management account options to choose from.

E*TRADE is one of the top platforms for trading options. It’s one of the best platforms in the industry that provide interactive charts, risk/reward analysis, technical pattern recognition, etc.

E*TRADE also provides you the opportunity to invest in Forex, future, and certificates of deposit.

Its basic trading fee is $0 for each trade for options, ETFs, and stocks.  E*TRADE has offers of not less than 250 commission-free ETFs, and over 4,400 no-load, no-transaction-fee mutual funds.

Self-directed and managed investment programs are available as well as a large options trading platform and commission-free funds.

Why You Should Open an Account with E*TRADE

  • Its minimum startup capital is $500
  • You don’t pay any monthly or yearly fees for your IRA account.
  • If you want to include Options in your IRA investing activity, then E*TRADE may be the very best platform for you.
  • It offers frequent options for traders’ lower commission fees.

Betterment

For the fact that IRA is self-directed doesn’t mean you have to over-stress yourself in order to manage it. There are many Robo-advisors in the industry today that can do 100 percent management of your investment for you. All you need to do is fund the account, then sit back and watch your investment grow.

Betterment happens to be the best Robo-advisor and the most independent in the industry.

You get started by filling in a brief questionnaire which establishes your investment goals, horizon, time, and risk tolerance. After that, Betterment will design a portfolio consisting of 12 index-based ETFs that invest in bonds and stocks. They handle portfolio set up, dividend reinvesting and rebalancing as much as possible.

They do all the management for you, only for 0.25 percent of your total IRA
balance. This means you can have your account with a startup capital of $50,000 managed for just $125 annually.

You can create an IRA at Betterment with only $0 and then fund it gradually with monthly contributions. You can easily achieve this through payroll contributions the same way you would with your savings account or checking account.

Why You Should Open an Account with Betterment

  • You are able to invest money without having prior knowledge of investment management.
  • You don’t need a minimum investment to start.
  • All your investment accounts can be managed for a very low annual fee.
  • They have a good assistant guide that can help you in planning towards your retirement.

Reasons You Should Not Go with Betterment

Betterment may not be a good choice if you plan to become a self-directed investor because its service offers complete hands-off investing, leaving you with no choice over the types of investments you will hold, and also the fact that you will not be able to trade them.

Betterment is still a great choice if you prefer a complete hands-off investing. All you have to do is fund your account, and Betterment handles your investment accounts for you.

Acorns

There are so many people who don’t even have retirement savings account perhaps because they do not know how to save or manage their money. There are some people who are good at saving money naturally, while others struggle just to save even a penny.

lf any of the above describes you, then you can consider opening an IRA account with Acorns. It’s a micro-savings app that lets you invest even with your spare changes.

How Does Acorns Work?

The savings processes work this way:

Buy a pair of socks for $7.25 on eBay; Acorns deducts $8.00 from your account paying $7.25 to eBay and allocating the remaining $0.75 for savings.

The Acorns app connects to your checking account and automatically performs this task whenever you purchase the report. This process is mostly referred to as Round-ups because what it does is literally to round up each purchase to the nearest whole dollar, and allocating the differences to savings.

Once the savings amount piles up to at least $5, it’s automatically moved from your checking account to your Acorns account, which is then invested for you.

This actually means that you will be saving money for your retirement each time you purchase something from your checking account. It perfectly suits those who are not able to save money intentionally for whatever reasons best known to them, although it doesn’t stop there.

Even if you can rely on savings made from the purchases you make, you can still spare some extra change to steadily fund your account; you can also make a one-time contribution each time you feel like. These two combinations of savings can make your account grow large in a matter of time.

Why You Should Open an Account with Acorns

  • You do not need any minimum investment; thus, even a college student can get started.
  • This platform is made basically for all those who don’t know how to save their pennies; so, it helps them save through daily purchases.
  • You don’t need to manage your account as it is fully managed for you; all you need to do is fund it.

Why You Shouldn’t Go with Acorns

If you can save your money on a regular basis, then you may not need the services of Acorns, because it’s not perfect for self-directed investors.

Who is Acorns Perfect for?

If you haven’t been saving for retirement, and your main reason is that you are unable to save at all, then Acorns is a perfect choice for an IRA investment account. You go about making purchases as you normally do, and small amounts of money get into your IRA account.

Stash

Stash is partly a micro-savings app and Robo-advisor. It’s actually a kind of app you install into your Smartphone to enable you to save money. As you save, the money is transferred to an investment account, where you invest the money based on Stash recommendations. This kind of investment platform accommodates both taxable accounts and IRAs.

This micro-savings application connects your bank account with stash, for regularly transferring money into your account.

You can also schedule transfer to be done regularly, allowing you to grow your account at your own pace.

Stash charges a monthly management fee of $1 on account balances below $5,000. But if your balance is above that, the price is 0.25 percent of your balance per year.

Why You Should Use Stash

Stash is good for IRA starters. If you have never been able to save money in the past, this app can help you start saving small amounts.

You do not need more than $5 to get started or just $15 for an IRA
account. Stash also provides investment guidance for those who know how to manage investments.

Why You Should Not Go with Stash

Stash mainly targets new and small IRA investors. Another disadvantage is that the fees are higher on small accounts.

Another disadvantage is regarding the management of your IRA accounts. Stash doesn’t manage your investment accounts for you; they only provide necessary recommendations.

Who is Stash Best for?

Stash is perfect for anyone who is having difficulties starting the IRA journey. You can get started by investing little amounts on a regular basis to grow your account.

You can start your investment journey with stash and then move over to another platform mentioned above as your interest grows.

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