Individual retirement accounts, or IRAs, are a great way people can save for their golden years. Roth IRAs can be particularly attractive because they’re an after-tax savings instrument. This means that people pay taxes at the time they make a deposit into their account. Then, when they’re older, they don’t have to pay taxes on the distributions they receive.
Of course, not all Roth IRAs are the same. There are a number of brick-and-mortar institutions that offer Roth IRA accounts. Today, even apps are getting in on the game. For example, people can set up an IRA in Acorns. Before deciding which Roth IRA to go with, it’s important to do thorough research and make some comparisons.
For example, Vanguard is a great choice when it comes to a Roth IRA. Vanguard pioneered low-fee investments generally, and indexed funds in particular. People with Vanguard Roth IRAs choose what investments their money will be put into. This gives them more control, but it also requires more responsibility. Savers who choose the Vanguard Roth IRA need to be willing to monitor how their investments are performing and make changes when needed.
People who want to be less hands-on should look into a Roth IRA through TD Ameritrade. This brokerage gets high marks from observers and customers. They’re known for great customer service and research, which can help demystify IRAs for first-time investors. Self-directed Roth IRAs through TD Ameritrade have no fees.
Traditional Roth IRAs are usually invested in assets like stocks and bonds. But as the financial world changes, Roth IRAs are evolving, too. A great example of this can be seen in the Roth IRAs offered by AltoIRA. Account holders with this company can decide to put part of their retirement savings into venture funds, cryptocurrency and other alternative investments. Before doing this, it’s important to remember that venture funds are very risky. Returns can take a long time to materialize, if they ever do.
Finally, robo-advising has become an important trend over the past few years. Robo-advising removes the issue of human error from financial advising. Sometimes, robo-advisers even get better results for their clients than human financial advisors do. Roth IRAs that utilize robo-investing can be found at Betterment.