Best Roth IRA Account Providers – Compare the Fidelity, Vanguard, T Rowe Price and others
|May 6, 2012||Posted by John Border under Roth IRA|
Great that if you have decided to open a Roth IRA account then you need to find an account provider who can help you make a nest egg for your retirement. I would say that it is one of the best things that you would have done for securing your post retirement future. The next question is where to open Roth IRA account.
There are things that you need to look for when you open a Roth IRA account and I must say that the bare essential that you need to look for are these
1) Minimum Deposit or minimum contributions that you need to make
2) The fees that the provider will charge
3) Types of investment options that the provider offers. Do they offer only mutual funds or only stocks or only CD’s
4) The provider financial health and reputation
There are several other things that you can think about. However these from my point of view , are the absolute must. Now here is my list of the providers who definitely are the best in class. Also there are several others who you can choose from.
Fidelity, Vanguard and T. Rowe Price are the best when it comes to
2) Variety of funds and ETF’s they offer
3) Customer service
4) Financial strength
As you can see above, I am not even mentioning the minimum contributions, as for me the service and the amount of choices far overweigh the minimum contributions that these three ask. A little secret, well not a secret, is that these funds definitely have something which will help you avoid those expensive monthly contributions and that is what I will let you know based on the research that I did on the these three and several others.
Account fees – Nil
Minimum fund contribution to open – $2500 or $200 (waived for rollovers and transfers)
Effectively you can open a Fidelity Roth IRA account if you have that $200 every month using the automatic transfer. Now you can select to invest in stocks, mutual funds or ETF’s. Investing in stocks means that it will attract a $7.5 per trade brokerage. There is a way to avoid that and it is to invest in mutual funds which have no transaction fees.
Fidelity is the leader in mutual funds, so you can definitely go with this option.
No Minimum fees – If you elect to get electronic statements. Otherwise it says that $20 mutual fund fees apply for balance less than $20.
Again as with Fidelity they also give you advantage if you have automatic contributions. Automatic contribution of $50 is what Vanguard requires.
Best for core target retirement funds and ETF’s. These ETF’s have low expense ratios and it is definitely the leader in index funds.
This again has no account fees – if you elect to receive electronic statements etc. Otherwise the fees start getting applied if your balance is below $50000. Again they have a minimum of $1000 to begin with
Let us talk about others which are called as the discount brokers and definitely are good though do not have the huge variety of funds like the big three
A good discount brokerage house and is definitely worth looking if you are just beginning and do not want to have those big three. Now I will definitely say something at the end of this article which will be very helpful and is based on what I gather is the most popular opinion from among investment advisors
Scott trade has $7 per stock trade
No minimum balance for sure
No minimum account balance
No IRA maintaennace fees
A good amount of local branches
They also have some commission free ETF that you can invest in.
$9.95 stock trades . yes it is expensive
No fees with electronic statements, no minimum balance for Roth IRAs accounts.
This has some very good features and those are
$0 stock trades
$0 for maintenance fees
No minimum deposit to open
They have a yearly fee and that is on the lower side below $100.
My opinion and what about yours
Each of these companies definitely need to charge the fees in some form or the other as it is their business. So look out for hidden fees etc. Also keep an eye on the mutual funds and fees like a hawk.
Also the main aim should be to cut out the broker and buy directly which means that effectively you do not really need a huge amount of funds or stocks to save for retirement. Go for a sound asset allocation strategy pick your mutual funds, index funds and then stay invested. In the longer run you will definitely make money enough to survive your retirement. That in nutshell means that you either select a good amount of funds from Fidelity or Vanguard or T. Rowe price and stock with them for good. That will help you maintain a no fees strategy .