When looking to open an IRA, it’s essential that you understand all your available options. Finding the right provider could lead to higher rates and long-term gains.
An IRA at a brokerage or robo-advisor offers more investment flexibility than its bank equivalent, yet these accounts often come with fees such as trading commissions and fund expense ratios that reduce returns over time.
Bank IRAs
IRA accounts offer tax benefits for retirement savings, yet are subject to various rules and restrictions. Depending on the institution, contribution limits and minimum investment requirements may apply; generally speaking, bank IRAs offer options such as savings accounts, certificates of deposit, and money market accounts.
These accounts typically offer lower interest rates than traditional savings accounts, yet still provide a safe place for retirement funds. A bank IRA certificate of deposit may earn higher returns because you agree to leave it on deposit for an agreed upon duration.
An Individual Retirement Account, or IRA, at a brokerage firm may be suitable if you prefer riskier investments that could provide long-term returns. Unfortunately, they’re not FDIC-insured so could lose value during a bear market; before opening such an account it is important to research its background and track record as this could have an effect.
Credit union IRAs
If you’re an investor looking for higher rates of return than what banks can offer, consider credit union IRAs as an alternative savings account option. These accounts pay out extra interest in exchange for keeping money invested over an agreed-upon time frame.
Credit union IRAs offer tax advantages that make saving for retirement or college tuition affordable and stress-free. You can open Traditional, Roth and Simplified Employee Pension (SEP) IRAs at most credit unions.
IRA savings accounts offer similar guarantees as certificates of deposit (CDs), providing a guaranteed rate of return in exchange for keeping money in an IRA for an agreed-upon number of years. Like CDs, they’re federally insured by the National Credit Union Administration while investments backed by the full faith and credit of the US government as well.1. Check our Rates Page for current rates!
Brokerage IRAs
Though you can open a brokerage account at a bank, investment options tend to be limited. To expand your choices further, opening an IRA with an online broker or robo-advisor may provide more flexible investment choices.
These providers offer IRA accounts that enable you to purchase, sell and trade stocks, mutual funds and other assets easily and affordably. Most offer low or no fees associated with opening and maintaining accounts.
Vanguard provides access to an impressive variety of investments – stocks, exchange-traded funds (ETFs), bonds – with low or no trading fees and no transaction fees on online stock and ETF trading.
IRAs can provide an ideal complement to employer-matching retirement accounts such as 401(k) plans. Furthermore, their tax advantages provide penalty-free withdrawals in the future with a Roth IRA and deducting contributions now with traditional IRAs – both available to everyone with high contribution limits and flexible withdrawal rules.
Online IRAs
Many online brokers and robo-advisors provide Individual Retirement Accounts, or IRAs. IRA accounts usually come with low account opening fees and can be opened with any amount, though minimum investment or deposit requirements may need to be met in some cases. You will pay transaction and advisory fees, fund expense ratios, as well as annual maintenance charges when opening one of these investment accounts.
If you prefer more direct investing strategies, consider opening either a traditional or Roth IRA with a financial institution. Schwab, Fidelity, Vanguard and Charles Schwab all offer human advisor-managed IRAs while E*TRADE and Betterment provide online brokerage accounts with similar offerings. You may also open self-directed IRAs that allow investments such as real estate or cryptocurrency investments; just be sure that their custodian is qualified enough for managing self-directed IRAs before proceeding.
SmartAsset’s free tool matches you with pre-vetted financial advisors in your area who can help manage your retirement funds and achieve your financial goals. Interview your prospective advisor without incurring an interview fee before making your decision to hire them.
