Scottrade Roth IRA Review
If you are looking for a discount online brokerage to open up a new Roth IRA, Scottrade is a serious contender for your business. Scottrade gives you some of the lowest trading and investing costs available in the industry while also providing a wide array of investment options for you. Often times with low-cost firms you get low-cost service. Not so with this discount brokerage. The firm has won a multitude of awards both for investor satisfaction and as a great place to work. Scottrade is also not just an online brokerage firm. If you prefer to deal with a company in person you can simply walk into one of the firm's 500+ retail locations across the country.
As great as low costs and great service are, what matters most to investors is having a wide array of investment options. If you open a Roth IRA with Scottrade you will get access to a large variety of investments ranging from no-load mutual funds to ETFs to individual stocks. The firm offers access to over 14,500 mutual funds. More than 3,100 of those mutual funds are in Scottrade's no-transaction fee program. One unique investment option Scottrade offers is access to 15 ETFs that have no transaction fee and very low expense ratios put together by research firm Morningstar. But you aren't stuck with just these 15 options. Scottrade has a large number of ETFs from you to choose from.
Investing Fees and Commissions
The two things investors can control are taxes and fees. You are controlling taxes by investing with a Roth IRA. After that you want low transaction commissions and account fees. This is an area where Scottrade shines.
Stock and ETF Transaction Commissions:
- Online order: $7
- Touchtone Phone Order: $32
- Broker Assisted: $32
Mutual Fund Transaction Fees:
- No-Transaction Fee Mutual Funds: $0 to buy, sell, and exchange
- No-load Mutual Funds: $17 to buy, $17 to sell, and $17 to exchange
- Loaded Mutual Funds: $0 to buy, $17 to sell, and $17 to exchange
Account Maintenance and Closing Fees:
Unlike other brokerages, Scottrade doesn't charge account maintenance fees. If you decide to close your account, you won't pay any fees. Other brokerages charge $50 to $75 for you to close your account -- Scottrade will even pay up to $100 in transfer fees to your old brokerage when you open an account.
Low Minimum Investment
With Scottrade you don't need thousands of dollars ready to invest. You can get started with as little as $500.
Pros and Cons of Investing with Scottrade
Here are some things to consider when comparing Scottrade to other brokerage firms to open your Roth IRA at.
- Very low investing costs. With $7 trades for individual stocks and ETFs the company offers some of the cheapest trades available to retail investors.
- Large number of investment options. With hundreds of ETFs and over 14,500+ mutual funds, every investor will be able to find an investment to fit their needs.
- Local, in-person access. It is rare to find low costs, a great online interface, and 500+ local branches. Scottrade delivers on all fronts.
- Low starting costs. You can open an account with just $500.
- Mobile application. The company offers smartphone apps for iPhone, Android, and BlackBerry devices. Their website is also optimized for mobile browsers.
- No account maintenance fees.
- No account closing fees.
- Stock and ETF dividend reinvestment. As with any brokerage, dividends generated by your individual stock and exchange traded fund holdings cannot be reinvested through a DRIP program as they would with a mutual fund. The dividends end up in your account and you will have to pay a transaction fee to reinvest those funds for further investment.
What are you waiting for? Open a Roth IRA with Scottrade today and get on track to enjoy a tax-free retirement.
This article is by Kevin Mulligan. He is a debt reduction champion with a passion for teaching people how to budget and stay out of debt. Kevin’s been utilizing a Roth IRA to save for retirement since 2008.