An IRA is an Individual Retirement Account. It is one of the best ways to help save for retirement. It can be broken down into a traditional or Roth IRA.
In a traditional IRA, the money is put into an account to help defer taxes until the money is taken out during retirement.
A Roth IRA is an account for after tax money to be put in. The money will therefore grow tax free.
9 Best IRA Accounts for 2020
Here are the 9 best IRA accounts for 2020:
- M1 Finance
- Charles Schwab
- Ally Invest
- TD Ameritrade
M1 Finance is a newcomer to the broker world. It is a type of robo advisor that offers free trading and $0 commissions.
As the investor you have the options to set-up your investments in the form of a pie. Each piece represents one of your investments. It is designed for long term investors, and it will buy securities anytime you invest or have enough dividends to reinvest.
It is good for automatic investments and creating a portfolio with $0 fees and commissions.
Vanguard is the largest mutual fund company in the U.S.A. They are like the kings of the investing world due to their low-cost index funds they provide.
They offer a wide variety in $0 commission ETFs, stocks, and index funds. Their index funds do require some minimum investments to get started, but there are always the options of their ETFs.
Fidelity is that big competitor to Vanguard. It has become a big time investing company in the last couple years with $0 commissions and trades, and even provides a wide variety of low-cost index funds as well.
It now has many $0 minimums and they offer some 0% expense ratios on some of their funds.
They have excellent customer service, and have an easy navigable website to help their clients with investments.
Charles Schwab is a company that can offer it all. It is a complete banking company that offers banking and low cost investing. They offer commission free stock trading and the zero minimums on their funds like Fidelity.
Their website is very customer friendly, and their customer support is top notch. It is 24/7, and you will have an amazing experience dealing with Schwab.
If you need a bank account they also offer those that can be linked to their investment accounts. They do offer a fee free ATM card with the bank account. Check it out.
Ally Invest is quite new on the scene. They are an internet bank that has gone into investing. Like most of the companies on this list, they offer commission free investing on stocks and ETFs.
There are no minimums to join Ally Invest, and you will be able to invest in popular funds from Vanguard, iShares, Fidelity and other companies as well.
TD Ameritrade is all about commission free trading. This is like the one stop shop where you can buy hundreds of ETFs commission free plus some stocks as well that will be commission free. It also offers over 13,000 mutual funds that you can buy and trade commission free.
If you are looking for a place that has it all. TD Ameritrade has a ton to choose from.
They also offer calculators and fee analyzers to help you in making decisions about your investments.
E*Trade is another great platform for mutual funds. It has no transaction fees on over 4400 of the mutual funds you buy through them.
It truly is a great online brokerage company that can help individuals, and it offers many options for the individual investor.
Betterment is another Robo Advisor. It is quite similar to Wealthfront. It has a 0.25% fee on your portfolio and it is another set and forget it strategy.
With Betterment there is no minimum to start. You just answer a set of questions, invest the money, and let Betterment do all the work for you.
If you would like more human interaction with Betterment the fee goes up to 0.40%. Otherwise it is a pretty good company as well.
Wealthfront is one of the classic Robo Advisors that came on the scene a couple of years ago. It has a fee of 0.25%. This is a good company for those that want to set it and forget it mentality.
You answer a few questions and Wealthfront will create a portfolio right for you. There is a $500 minimum, and you can automatically have it invest your money for you. Basically, you let Wealthfront do everything for you.
How to choose the best IRA Account?
Each account is different based upon your needs and wants. When determining if you should go the traditional vs Roth route depends on your taxable income. For those young adults that are low income earners a Roth is the best route. The higher income earners would prefer a traditional IRA in order to reduce taxable income.
When thinking of which account you would prefer, just look at a couple things like
- expense ratios
- customer support.
These will help you in determining which would be best for you and your needs.
Some other thoughts
Take a look at your investing strategy. Think about what you want to do with your money, and determine which of these accounts will best help you to achieve your goals while investing.
IRAs are a great tool to save and create wealth for your retirement. Take advantage of these accounts, and let it help you create wealth for your future.
” Spend less than you make, stay out of debt, and invest the rest”
I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.