best ira online brokerAs a financial advisor one of the biggest frustrations about our industry is for the young investor that want to get started investing into an IRA.

Why is it frustrating?

Because most big firms don’t want to help new investors.

Otherwise known as “small investors”.

Yes, you can walk into an Edward Jones office and open an IRA, but you’re going to have to pay an annual custodial fee.

They aren’t the only ones.  All big brokerage firms will charge $40-$75 per year just to have the account open.

In addition, some firms will charge you a small account fee if you don’t generate enough commissions or fees or the year.

Over and above that, you’re either going to have to pay a commission for each mutual fund, stock or ETF trade that you place or you have to pay an advisory fee which will be anywhere from .75% to 1.5% of your account balance.


As you can see, yes you can open the account with a big brokerage firm, but they’re going to gouge you in fees making it nearly impossible for any new investor to make any money.

So what’s the alternative?

Open an IRA with an Online Broker

Introducing online brokers for your IRA. Having started in a big box brokerage firm, I was oblivious to all the online options that exited. Yes, I’ve heard of Fidelity. Yes, I’ve heard of Vanguard. And, yes, I’ve heard of E*TRADE, but I had to admit I really didn’t know how it works opening an account with an online brokerage.

Originally I started doing some investigating and was almost blown away at how cheap and easy it is to open an IRA with an online brokerage. Most of them don’t charge any account fees. They won’t ding you if you don’t have a small account size and even more impressive was that most of them offer customer support whenever you need it.

If there is a downside, you don’t get the option of actually going to an office and sitting down with an advisor, but even places like Scottrade offer that. In this post, I want to do a quick rundown of some of the best IRA brokers that you can open up an account with online today.

Online Brokers with Most IRA Options

If you’re looking to open an IRA with an online brokerage firm, you have a lot of options. Here are some of the best ones to choose from and why we like them so much.

Open an IRA with Scottrade

ScottradeScottrade is one of the best online brokerage firms around. Why? Because not only is it an online brokerage firm with extremely low trade costs, but you can also go to a local Scottrade office to talk with a broker directly if you like. It’s like getting the best of both worlds: $7 trades (some of the lowest around from a major brokerage) and in-person help when you need it.

Scottrade lets you trade stocks, options, mutual funds, ETFs, bonds, CDs, and Treasury products. The more complicated and niche investments like futures and forex are not available, but the average investor won’t need either of those.

Open an IRA or Roth IRA with Scottrade today.

Open an IRA with E*TRADE

If E*TRADE had local branches it would be tied with Scottrade.

However, if you’re looking for some of the best online trading tools available and a firm that has been in the industry for a long time, E*TRADE is a great choice. Pricing is just slightly higher than Scottrade’s at $9.99 per trade, but some of the additional tools you receive can be worth it.

With E*TRADE you can trade everything from stocks to bonds, mutual funds, ETFs, options, futures, and forex.

Plus, right now E*TRADE is letting you trade absolutely free for 60 days. If you transfer enough money to them they’ll also give you an account bonus starting at $200 for transferring $25,000. (The maximum bonus you can get is $600 for transferring $250,000.) To receive this offer use the banner to the right.

Open an IRA or Roth IRA with E*TRADE today.

Open an IRA with Vanguard

Vanguard is a fantastic firm with a “slow and steady” mentality. I would rate them higher, but their brokerage firm costs are a little pricey and the number of investment options is not quite as diverse as the ones above.

That’s because Vanguard is all about indexing and low costs. If all you need is to open an IRA and grab a few index mutual funds or index ETFs, Vanguard is a great choice. If you’re looking for exotic investments or to trade a lot of stocks, it may not be the best choice.

The fee commission structure is based on how much money you have in your account. Trades start at $7 for the first 25 trades, then jump to $20 per trade, if your account balance is less than $50,000. After that the fees get a lot lower: trades at $7 if your account has less than $500,000 in it, then $2 up to $1,000,000, then free or $2 depending on how many trades you have.

Open an IRA with Capital One ShareBuilder

Capital One ShareBuilder is a great company to open an online IRA with if you are just starting out and don’t know what to invest in. The company’s existence is tied to helping you automate and build up the habit of investing. Your Roth IRA or IRA is a great place to learn that habit.

The investment options are basic as well, but should meet the needs of most investors. You get access to stocks, ETFs, and mutual funds.

Trades don’t get any cheaper than at Capital One ShareBuilder. If you set up automatic investing your stock and ETF trades are only $4. That’s incredibly low and a nice way to start out building a new portfolio in an IRA. If you need more of the crazier investments like futures, options, and forex then Capital One ShareBuilder isn’t for you. For everyone else, this is a great way to start your IRA investing.

Plus for a limited time you’ll get a $10o bonus when you open an account and fund it with more than $5,000.

Open an IRA or Roth IRA with Capital One ShareBuilder today and get a $100 account bonus.

Open an IRA with Betterment

Best Online Brokerage Firms for Beginner InvestorsOut of all of the brokerage options listed here Betterment is likely the award winner for most unique.

What exactly does that mean? Well, Betterment is an online brokerage firm whose goal is to make investing as simple as possible. With so many options out there: stocks, ETFs, bonds, index funds, actively managed funds, and a multitude of other niche products, investing for retirement soon becomes a complicated mess of alphabet soup.

Not so with Betterment. The company essentially has one big account and then a meter between how risky and how conservative you want your portfolio to be. That’s your only choice. The company then invests in a basket of either stock ETFs or Treasury bond ETFs depending on the allocation you choose. You don’t have to pick the individual investments. The only choice is what percentage for stocks and what percentage for bonds.

It’s simple, easy, and makes sense for those that want a “set it and forget it” investing style. Fees are low — but are based on percentage of assets invested. Fees range as low as 0.15% of assets invested to 0.35% of assets invested. That’s equivalent to as much as $35 on a $10,000 balance to as little as $15.

Plus, for a limited time if you open an account Betterment will give you a $25 account bonus for free.

Open an IRA or Roth IRA with Betterment today. (And get $25 for free!)

Open an IRA with TradeKing

Trade King is an interesting firm because it was one of the leaders in drawing down commission prices across the board. The firm recently merged with Zecco which used a similar strategy. Stock trades start at $4.95 per trade and you get access to stocks, ETFs, bonds, mutual funds, and options. These are the lowest trades available from a reputable company.

Open an IRA or Roth IRA with TradeKing today.

Open a Roth IRA for Peer-to-Peer Lending Investing

What if you like to invest your funds in loans given to individuals to help them pay off their debts or build a business through Peer-to-Peer Lending? While you might not want to dedicate 100% of your Roth IRA to this purpose, the good news is you can definitely open a Roth and fund it with money with the two most popular P2P sites.

Open a Roth IRA with Lending Club

Lending Club wasn’t the first P2P lending site, but they seemed to have learned from the mistakes of all the other failed sites. Better borrower and lending screening and a great collections ratio makes us lean toward Lending Club as the P2P company of choice. All those improvements mean you have a little bit more security when letting random strangers borrow funds online for profit.

You wouldn’t think you could open a P2P Roth IRA, but you can with Lending Club. It is really a Self-Directed IRA through a custodial company, but it can be done.

Open a Self-Directed Roth IRA or Traditional IRA with Lending Club today.

Open a Roth IRA with Prosper

Like Lending Club, Prosper — the original popular P2P lending site — offers a Self-Directed IRA for both Traditional and Roth IRAs. You can rollover your IRA (or 401k) and use the funds to invest in Prosper loans. Prosper uses a different custodial company than Lending Club, but other than that the idea is pretty much the same. It really comes down to which P2P investing site you prefer because both options are very similar.

Open a Self-Directed Roth IRA or Traditional IRA with Prosper today.


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Comments | 8 Responses

  1. says

    I’m really sad that you didn’t include TdAmeritrade in your list. I have a Roth and a Individual Trading Account with them and love it. Their commissions are a little high at first ($9.99) but if you trade enough or have been with them long you can ask to get that lowered. I also like that they offer all of their trading platforms for free, which is something Etrade charges for unless you do so many trades per quarter.

    Sharebuilder can be a great broker for long term investing, but they have a downside also. Any trade which is more than 1000 shares they charge you extra. Not a fan of that.

    As for Zecco, I’ve used them also and I have to say, you get what you pay for.

  2. says


    Great comments on the different on line brokerage houses and I agree that the big companies simply don’t want to help small investors because they don’t see them to be profitable. This is why young investors should look for a company specifically focused on the X and Y generation or engage in some type of fee based relationship if they need to get advice. 

    Ted Jenkin, CFP®, AWMA®, CRPC®, AAMS®, CMFC®, CRPS®
    Co-CEO and Founder of oXYGen Financial, Inc.
    Editor In Chief at Your Smart Money Moves

  3. Evan says

    How do you switch the Ira from a big firm with large fees to a better firm like etrade? Is it possible?

    • Jeff Rose says

      @Evan. It is possible. You would then to open a new account with the online brokerage of your choice and then fill out their transfer paperwork. They will then contact your old firm to transfer the account.

      The only issue is that your old firm is going to hit you up with a transfer charge. IRA’s are in the neighborhood of $50-$95 depending on the firm. Plus they charge you some sort of pro-rated charge on the IRA custodial fee. I’ve seen some people charged around $150 just to transfer their account. A lot of money initially, but it should pay off in the long run.

  4. Dan says

    This was exactly the article I was looking for when I googled “online brokerages ira” because I have been paying $45 per year. Thanks for showing the range of choices with very clear explanations.

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