Best if you want
Schwab’s easy-to-use trading platform and a wide selection of investment options (including ETFs from Schwab, StateStreet, and Blackrock), make it a good choice for investors of all experience levels. Schwab’s $0 commissions and fees on stocks and some ETF trades allow investors to build low-cost, well-diversified retirement portfolios. With $3.7 trillion assets under management (AUM), Schwab’s customer-first philosophy is exemplified in their excellent customer service – investors can reach Schwab 24/7 either by telephone or online chat.
Fees
Self-directed retirement accounts typically carry two types of fees: annual account fees and transaction fees. Account fees are usually expressed as a percentage of your assets that’s paid each year (e.g. .50% per annum). On the other hand, transaction fees are charged exclusively during trading. The cost of annual and transaction fees have decreased dramatically over the past decade, but are still an important consideration when deciding if a broker fits your needs.
At Charles Schwab, you’ll pay:
- No annual account fee
- No commissions on trades of stocks, ETFS, and options
- Options carry a contract fee of $0.65 per contract, which is in line with other brokers
What you can invest in
Like with all self-directed accounts, choosing the investments in your retirement account is entirely up to you! You’ll select from a wide variety of investment options including stocks, ETFs, mutual funds, options, futures, and bonds from Schwab and others, which will allow you to create a well-diversified portfolio at a low cost. If you aren’t sure where to start, you can use Schwab’s “Portfolio check up” and “Model Questionnaire” tools to determine if your portfolio is in line with Schwab’s general recommendation, but if you want more personal advice, you’ll need to move into Schwab’s advisory program, which comes with higher fees.
Other features
Schwab gives investors access to detailed research which can be helpful when building your retirement portfolio. Schwab’s resources aren’t exclusive to retirement savings, though, and can also help you invest for other goals, such as saving for educational expenses.
Limitations
Uninvested cash in Schwab accounts is swept into an account paying less than 0.50%, which is below the industry average. Investors can opt into other cash-equivalent securities, like Schwab Value Advantage Money Fund (SWVXX) instead, but those are not the default option.
Conclusion
Schwab’s Rollover IRA is a good option for cost-conscious investors looking to manage their own retirement accounts. Schwab offers detailed research, an easy to use platform, and excellent investment planning tools which can help independent investors plan for retirement with confidence.
