An Individual Retirement Account (IRA) is basically the savings account which allows individuals to save for retirement with big tax breaks. These accounts can be opened in different types of financial institutions, and basically act as baskets through which investments can be made in stocks, bonds, certificates of deposit (CDs), mutual funds and exchange traded funds (ETFs).
Types of IRAs
The major types of IRAs are – Roth IRA, Traditional IRA, and Rollover IRA. Roth IRAs are best for young adults with small incomes who want flexible investment options. Traditional IRAs are mostly opened by adults who start an IRA later in life and want to reduce their taxable income each year. Rollover IRA is basically an action of transferring retirement funds into traditional or Roth IRAs. Common rollovers are 401k and a 403b.
If you are planning to open an IRA during this tax season, then we give you some of the IRA offerings by different companies:
1. Vanguard – This company gives one of best IRA investment options. It offers a wide range of mutual funds and ETFs at extremely low costs. With a minimum limit of $1000 to open an account, Vanguard’s brokerage units enables investors to purchase ETFs, by other financial institutions, bonds, stocks and the cost per trade is minimum.
2. Scottrade – It is an online broker of IRAs with around 500 branches across the nation. There is no minimum deposit requirement to open an IRA in Scottrade. It offers access to 3,100 mutual funds with no transaction fees.
3. E*Trade – It is also a very popular broker giving one of the best IRA investment options by offering access to every investment product you could ever need. With no account minimum, you can invest in over 8,000 mutual funds, with 1,300 of them having no transaction fee. E* Trade was ranked No.1 in 2012 by Kiplinger. The only limitation in opening an IRA here is the trading commission which can get double, when compared with players of the trade.
4. Betterment – It is one of the first ‘robo advisors’, helping investors with a robust set of tools in making investment decisions. Here an account can be made online and deposits made via a transfer from a bank account. Though with no account minimum, it charges additional fee on top of the cost of ETFs.
5. Tradeking- It is an online broker which has a low trading fee of $ 4.95 per stock or options trade. It has been ranked No.1 in customer service by Smart Money.
Image credit: wheretobuypreciousmetals.org