How to Compare IRA Rates

By Faith O

  • Overview

    An IRA (Individual Retirement Account) is an account sanctioned by Congress that allows individuals to set aside pretax dollars up to an annual maximum for retirement. Once an IRA is opened, the individual can decide what the money is invested in. It can range from a simple certificate of deposit, to stocks and bonds or mutual funds. The type of investment chosen determines how a comparison can be made in deciding where to open an IRA account.
    • Step 1

      Compare the components of IRA funds from online brokers. The common online brokers include E*trade, Fidelity, Ameriprise, To compare you need to look at what is included in the investment portfolio and if you feel comfortable with the basket of stocks they have chosen. For example ING has a variety of mutual funds at different risk levels depending on whether you are investing for long-term growth or for stability. See a link in resources below for ING's IRA mutual funds.
    • Step 2

      Compare management fees. Most IRA mutual funds charge a management fee--1.5% is very common. Some also charge custodial fees and some commission or sales fees. Make sure of all the fees being charged before you open an account.

    • Step 3

      Compare minimum amount to open an account. Another thing to consider is the minimum amount required to open an account. For example ING requires a $250 minimum for one of its Orange IRAs. You can open an account with $25, if you enroll in a $25 per month automatic investment plan. See a link in Resources below for a comparison of two well-known online brokers.
    • Step 4

      Compare cost of trades and account monthly fee. If you decide to open a self-directed IRA account in which you actively trade stocks, bonds and ETFs, then the monthly cost of the trading account as well as the cost of each trade becomes important. Sharebuilder provides affordable trading accounts and requires no minimum to open.
    • Step 5

      Compare performance over time and reputation. Another thing to look out for is the performance of a particular fund over time. Many mutual funds traditionally do not do as well as the major indices after factoring in management fees.
    • Skill: Moderately Easy

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