So, you may have read that I am looking to transfer my wife’s ROTH IRA and I have been looking at options as to where to transfer this to. So I decided to pull together a few options to compare. Although there are many brokers, there are a few in particular I wanted to take a closer look at and go through some of the reasons why I may choose a certain broker for the ROTH IRA.
Fidelity
This is an easy one for me as I currently have my ROTH account with fidelity. I really like the history for stock purchases and how it lays everything out right on a single page. I can easily view the cost of a purchase, when it was purchased, and how well that particular purchase has done as far as growth. It is a great tool to have in a regular brokerage account because this type of detail is needed for determining cost basis and the type of gain (such as short or long term). However, it may be very nice to have in a ROTH, it is not necessary as nothing will be taxed. The cost per trade is $7.95 which is a little bit higher than where the competition seems to be, which makes me desire to try another broker.
Merrill Lynch
I thought this broker may be a good value since, at the time of writing, once you accumulate $25,000 in assets they allow 30 commission free trades. As my wife’s 401(k) will be with this company, I tried to get an answer if the combined balances would count towards meeting this requirement as it would make it much quicker to get to this mark. Well no clear answer was received regarding this from her 401(k) rep, just that there would be an annual fee of $90.00 for household’s with less than $1 MILLION dollars with them.
Thanks, but no thanks. I am looking to AVOID fees, not get more.
But I do think there is a difference between Merrill Lynch and Merrill Edge, which is odd because they appear to be the same company. Either way, if they are in fact different companies then they combined balances probably would not work together towards getting the free trades. I think the company I was originally thinking of with the free trades is actually Merrill Edge, but as I mentioned, without linking the amounts there isn’t any real incentive to use them as this time.
Scottrade
This broker is highly recommended by Dividend Mantra, and he uses it for building his dividend portfolio. At $7 a trade they offer a reasonable value. I am not too familiar with their system as I have never had an account with them. I was searching for current promotions with Scott’s Trade and the only thing I could find is a if you get a referral you can get 3 free trades. Better than nothing, but that won’t help too much with losing about $300 in the processing of this transfer mostly due to deferred sales charges. I was mostly leaning towards using them as a broker until I found out about the last company on my list.
Options House
With $4.75 a trade and alot of current promotions going on, they seem like the best price dollar wise for an online broker. Being that my trades will all take place in a ROTH account I am not too worried about the cost basis showing up correctly for tax purposes, and I should have all of that information on this blog as I make the transactions in the future. With the $100 sign-up promotion for transferring a balance over $5,000 this may be the best deal for me currently. If I find that I do not like their system I must wait at least 6 months after the transfer to not lose out on the bonus. So worst-case scenario is 6 months with them and I can then choose another option if I find I do not like their service.
Conclusion
I think I will go with Options House at this time based on the prices for buying individual stocks. I know that Vanguard was a company highly recommended as their index fund seems to have no equal, but I am trying to build an income portfolio in my ROTH’s as my strategy while the tax-deferred accounts build all in index funds. Some may disagree with this strategy, but there are several seasons I am doing it this way. One is index funds are a sure way to track the market, but I actually enjoy the individual stock market. Also dividend income is more stable than selling shares and it will allow more peace of mind when retirement is reached as I can just live off of the income of the stocks. I feel that in doing both I am getting the best of both worlds.
Anyways, I think I will start with Options House. If I find I do not like their brokerage account, then maybe 6 months later I will review again, but probably go with Scottrade.
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Have you looked at Schwab? I use them and the customer service is fantastic. Commission is a bit high, but I got mines lowered to $6.95 per trade and received 100 free trades. I only used like 10 so far this year.
Cheers!
Hi Henry,
I actually have a brokerage account with them where I was just getting there ETF’s as a higher level emergency type fund (that I hope is never needed
). Yea their base trade price is very high at $8.95 so for purchasing something that isn’t a NTF it would be painful. I also do not like the interface compared to Fidelity’s, the detail history for purchases just isn’t there, which isn’t good being it is held in a brokerage account. It wouldn’t be an issue for a ROTH, but the trade fees are high unless you negotiate down.
Thanks!
All of our stuff is with Vanguard. Lowest fees out there and I love their user-friendly online interface! Any of the options you mentioned are good ones!
Oh yea, Vanguard is a great choice by far. I am a different in this area… I don’t subscribe to all in dividend or index investing while growing my fund, while you see most other bloggers choosing one or the other. At retirement I would probably choose a dividend investing approach, but I don’t feel that I would completely abandon the index fund either. I get my index allocations through the 401(k)’s so I feel good there.
I have everything with Fidelity (401k) and Vanguard (Roth IRA). I went with index funds because the expenses are very low and the risk is a bit lower. Any of the brokers you mentioned above are a good option if you’re not going the “index” way.
Thanks for the insight Aldo, I do agree if you are indexing then Vanguard is the way to go. I am allowing my tax deferred investments (401K) to go the index route while I plan to do dividend stocks with the ROTH accounts. I think I will always want a portion of my money in index funds, but once I am FI probably mostly in dividend stocks for a more stable payout in retirement (which is why I am working on building that now as well).
This is pretty much the exact approach I’m taking. Index funds in the 401k and dividend stocks in the brokerage and Roth accounts. And like Aldo, my 401k is with Fidelity and Roth with Vanguard, luckily we have some pretty low cost index funds available in the 401k (0.02, 0.05, 0.06, and 0.12% for the S&P, Bonds, International, and Emerging Markets)
Hi Brian,
I don’t know many others who take this approach to be honest. Most people blogging I have run into seem to be geared one way or the other. Vanguard is hard to beat, but my 401(k)’s between the wife and I are with Merrill Lynch (which is apparently an almost completely open account where we can even pick individual stocks… once we get access…) and ING.
Thanks for stopping by!
I have an account with Sharebuilder. They have some pretty good deals, but it’s $6.95 per trade and not $4.95. I think I’ll have to check out options house now, though. Thanks for the info!
No prob, glad it was helpful! I see alot of other dividend investors checking them out, and for the deal for transferring from another broker it isn’t that bad. I just need to figure out what paperwork needs to be done now.
I’m a big fan of Vanguard. Even if you’re not someone who prefers index investing, I think their actively managed funds are top notch and have low fees.
Hey Andrew,
I agree that Vanguard is the best if you are going for Mutual Funds, arguing against Vanguard is like arguing against logic!
I have accounts spread out at Vanguard, Scottrade and Charles Schwab, all of which I love. The cool thing about this is that it’s not that hard to change companies if you don’t like Options House.
Hi Brian,
Yea stuff is everywhere for us too, main reason is if you are with an employer you do not have the option of choosing where it is in their 401(K). I am thinking Options House is a good starting place, the value is there, and like you said, if I don’t find it very user friendly I can just say goodbye (after 6 months, or I don’t get to keep the promo money).
Thanks,
Kipp
FFF,
I’m a month into my OH account and so far I can’t complain with only $4.75/trade. My original Roth IRA is with USAA because that is where I bank but they charge $8.95. USAA will charge $5.95 if I can accumulate $50K in my portfolio. When my OH account reaches $50K I might move back to USAA just for the convenience of having my investing and checking with the same institution. Also, I plan on having a $3K balance in Vanguard eventually for free ETF trades to compliment my dividend investing.
Good luck with your new account.
Regards,
Dear Dividend
Thanks dear dividend,
I think the ETF’s are a great way to pickup foreign stocks. We do seem to have a decent amount available through ADR but that isn’t everything either. I do want to keep maybe 10-25% of my portfolio in FI with an index fund which will probably be held in pretax accounts.
Kipp