Don’t Settle for Less: The Best Brokerage Companies for Your Roth IRA

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Some young people are thinking of their future and eventual retirement. In a popular Internet forum, one individual asked for recommendations about which brokerage company is the best choice for someone to start their first Roth IRA. They asked, “I’m young and realizing I should start putting money away into a Roth IRA, but I don’t know which brokerage firm is for me.

I plan to invest long-term and hold on to total market stocks (e.g., VOO, SPY, SCHD). I would like to know the pros and cons of the different platforms.” Their fellow forum members had lots of helpful suggestions and advice.

Fidelity

Fidelity is one of the most popular “big three” brokerage companies. One person noted that “Fidelity has equaled, if not passed, Vanguard around their selection of low-expense index funds. Some index funds have a 0% expense ratio, though once you’re under 0.1%, there’s only a practical difference if you’ve got a million-dollar portfolio.

Many Fidelity funds even have no minimum initial investment.” Another forum member stated, “Fidelity is a user-friendly option. Fidelity has physical offices” Other commenters mentioned, “Fidelity has the best user experience.” and “Fidelity seems to be the easiest to work with when a loved one passes away. Just personal experience.”

Vanguard

The second of the big three companies is Vanguard. A detailed comment from a user elaborated that “Vanguard has a lot of historical goodwill. They pioneered cheap index funds, so a lot of fund selection advice defaults to theirs. Suppose you see someone suggesting investing in an S&P index. In that case, VOO- Vanguard’s ETF will come up much more often than IVV, Fidelity’s someone else’s ETF for the same index.”

Related: Here is why VTSAX is a good investment

Users specified that the company’s structure is similar to a credit union and that Vanguard itself is “owned” by its funds, which in turn are owned by their customers. Another plus is that while Vanguard does have a $20 fee associated with its accounts, if you choose e-delivery, the firm will waive that fee.

Related: Learn Jack Bogle’s investing rules for success

Charles Schwab

The third of the Big Three brokerage companies is Charles Schwab. A knowledgeable fan of Charles Schwab said that the company “does have a wide range of investment options, including commission-free ETFs and mutual funds, making it an excellent choice for investors who want to keep costs low.”

Other points were that “Schwab is an excellent choice if you want to use their fantastic checking account or enjoy their cobranded Amex.” and that “Schwab has many good money market funds and easy ways to do more complex strategies with other instruments besides stocks. However, I prefer their UI less.

It’s very slow. I have an old 401k at Vanguard that I cannot part ways with because I’d have to divest my shares that they won’t transfer, namely Wellington and prime cap.”

E-Trade

E-Trade is a subsidiary of Morgan Stanley and an online financial service provider. The company is not one of the most conspicuous, but since Morgan Stanley backs it, it does have the benefit of that company’s history. A person with experience with E-Trade said, ” I’m at E-Trade. For me, the deciding factor was that I ALSO needed a solo 401k, and E-Trade’s offering there was better.

Also, my ESPP is through E-Trade, so it kept everything in one place. The merger with Morgan Stanley has been a benefit. E-Trade offers many investment options, including commission-free ETFs and research and educational resources.”

M1 Finance

M1 Finance is another financial services provider with a robo-advisor investment platform like others on this list. An admirer of the company stated, “I love M1 Finance and recommend folks. Give them a chance. I love them because it is easy to auto-set your pies, and you can buy ETFs from the big 3.

Related: See why so many people love M1 Finance

And if you ever change your mind on which investments you want, you don’t have to make a new account since Fidelity doesn’t like when you buy Vanguard. I moved my IRA there last year. They ran a promo to transfer assets to them and offered a bonus, so I moved all my Vanguard assets over.”

TD Ameritrade

TD Ameritrade has a reputation as a stock trading platform that has moved into brokerage services. This user said, “TD Ameritrade offers a user-friendly platform and a wide range of investment options, making it a good choice for investors who want to manage their investments.” However, a merger between TD Ameritrade and Charles Schwab has been taken to court by anti-trust ligation.

A commenter noted, “It may be too much of a headache to open an account there just to be converted over in less than a year. “

Betterment

Among the lesser-known candidates, Betterment does have its fans. One user with experience with the company noted, “I used to keep a Roth and other accounts at Betterment. I liked the simplicity, but then they started messing around with fees, and the taxable side became a pain when they began tax loss harvesting and rebalancing tiny amounts of money.

That said, you could do worse if it’s strictly retirement accounts. I like Betterment for the automation, but it invests primarily in Vanguard funds, so it’s up to you.”

Wealthfront

This fintech company is one of the lesser known than some of the others. Still, one enthusiastic user said, “I’m a big fan of the Wealthfront. I work in the wealth management industry and am the biggest on Schwab as a custodian. Wealthfront uses a mix of Vanguard, Schwab, and “ishares” funds.

Their instance with Schwab also has a free robo-advisor option. That’s great.”

Robinhood

While Robinhood is mainly considered a stock and cryptocurrency trading platform, the company has expanded into the brokerage realm. An admirer of Robinhood stated, “Robinhood has a simple and the best UI. They also match 1% of your contributions.” Part of the hesitancy to use Robinhood comes from its status as a new company untested in the brokerage world.

This cautious user said, “Some investment companies have a higher chance of bankruptcy or corruption than others, albeit likely low across the field. Just my two cents as an example, think of Robinhood compared to Vanguard.” A forum member responded, “I didn’t consider the variable of accountability in places like Robinhood. Fair point. I’m not as concerned about bankruptcy as long as cash is secured.”

This thread brought you this post.