Best Broker for IRA Investing
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Pros & Cons
Three platforms with no minimum or fees.
Above-average mobile app.
Large fund selection.
Commission-free stock, options and ETF trades.
Low default cash sweep rate.
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Charles Schwab caters to investors of all stripes: Beginner investors will appreciate the company's $0 account minimum, while the $0 commission for stock, options and exchange-traded funds will appeal to active traders. Schwab also receives high marks for its research offerings, low fees, selection of transaction fee-free mutual funds and sophisticated tools and trading platforms.
Charles Schwab is best for:
Investors seeking no-minimum index funds.
Investors who rely on premium research.
Stock trading costs
No base commission; $0.65 per contract.
Account fees (annual, transfer, closing, inactivity)
No annual or inactivity fee; $50 for full transfer out of assets; $25 for partial transfer of assets.
Number of commission-free ETFs
All ETFs trade commission-free.
Number of no-transaction-fee mutual funds
Over 4,300 no-transaction-fee mutual funds.
Three platforms offered with no trade minimums or fees: StreetSmart Edge (desktop platform), Schwab.com and StreetSmart Central.
Two mobile apps with above-average capabilities: Schwab Mobile and StreetSmart Mobile.
Research and data
Research from 14 providers including Moody's, Morningstar, Recognia, Credit Suisse and Thompson Reuters, plus more in-house generated commentary and tools.
Customer support options (includes website transparency)
Phone, email, chat 24/7 in person support available at branches M-F 8am to 5pm. Some branches have Saturday hours.
Where Charles Schwab shines
Mutual fund selection and expenses: Schwab delivers access to over 4,000 no-transaction fee mutual funds, and within its own proprietary lineup of index funds and ETFs, Schwab now offers some of the lowest expense ratios available. All told, over 500 funds on Schwab's platform have expense ratios of 0.50% or below.
The selection is also easy to navigate. Schwab's ETF Select List helps narrow the choices, featuring picks for the best fund in selected categories (more on this below). You can sort the list by feature, including expense ratio, Morningstar category and benchmark index. There's also the Personalized Portfolio Builder tool, designed to help you create a diversified portfolio based on your financial goals, risk tolerance and time horizon.
Research: Schwab’s research offerings are hard to beat, perhaps one of the best available from an online broker. The company provides its own equity ratings, along with reports from Morningstar, Credit Suisse, MarketEdge, Ned Davis and others. In addition to real-time news and earnings reports, the broker offers a variety of research reports and market commentary authored by in-house experts, as well as a quarterly magazine free of charge.
Schwab’s investment screeners are easy to use and let you save your screens. Select Lists, like the previously mentioned one for ETFs, are compiled by the company’s experts and released quarterly to give you a pre-screened selection of mutual funds and ETFs. The funds on the list are divided by category, so you can easily see the company’s picks for, say, large-cap stock mutual funds.
The company is also integrated with Google assistant — you can ask Google for stock quotes, general market updates and more — and has an Amazon Alexa skill that provides similar information, including the ability to create and get updates on a watch list.
Account and investment minimums: Schwab has no account minimum, and offers access to over 4,000 funds with minimum investment requirements of $100 or less.
Trading platforms: In addition to the basic trading capabilities on Schwab's website, the broker offers several robust trading platforms, all of which are free and available to all trading services clients.
Its premier offering is StreetSmart Edge, a customizable platform available with downloadable software or via cloud-based technology online. It also has a suite of programs called StreetSmart Central for options trading. Finally, the broker offers mobile trading, available on either the Schwab or StreetSmart Mobile apps.
Both StreetSmart and Schwab.com provide access to research and robust tools catering to various types of traders. Basic trades can be placed on Schwab's website, while the other platforms offer more sophisticated features.
StreetSmart Edge is designed for efficiency, with simple navigation and customization that's designed to match your trading style. The many advanced features include robust charting tools, the ability to trade multiple securities in the same order window (and with a variety of order types) and tools to monitor your market exposure. The customizable features of this platform are notable, including the Balance Bar, which gives you a quick overview of your account and buying power, along with the ability to create and edit multiple trading layout. Finally, you can quickly research a symbol, view streaming market data and enter an order.
Schwab.com lets traders monitor their portfolio and the markets, access research and view technical data. It features an intuitive trade ticket for stock, ETF and options orders that incorporates current market information.
Fractional shares: Schwab Stock Slices offers fractional shares, so investors can buy a small slice of a stock rather than paying the full share price. For example, if a stock costs $100 a share, and you buy a $10 slice, you’d own 10% of a share. Single slices are available for as little as $5, and investors can buy up to 10 slices at a time. However, this feature is only available for stocks of S&P 500 companies. Similar brokers that off fractional trading, like Fidelity and Interactive Brokers, don't have such restrictions on their fractional share offerings.
» Need some guidance? Read about how to buy stocks
Where Charles Schwab falls short
Low cash sweep rate: Uninvested cash in Schwab brokerage accounts is swept into an account paying 0.01%. Investors can opt into the Schwab Value Advantage Money Fund (SWVXX) instead, which pays considerably more and has no minimum, but that is not the default option.
The bottom line
Schwab checks the boxes of every type of investor: Stock traders will appreciate $0 trading commissions and sophisticated platforms, research and tools; beginner and fund investors will benefit from the wide selection of inexpensive and low-minimum mutual funds and index funds. For those who want investment management, Schwab has a robo-advisor offering, Schwab Intelligent Portfolios.
Disclosure: The author held no positions in the aforementioned securities at the original time of publication.
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Each factor can involve evaluating various sub-factors. For instance, when gauging the investment selections offered by robo-advisors, 80% of the score is based on the potential for diversification (how well-diversified a resulting portfolio of investments could be) combined with the availability of specialty portfolios and level of customization for investors. Expense ratios form an additional 10% of the score, and low or no management fee the remaining 10%.
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