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E-Trade Review 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.

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E-Trade is a giant in the investing industry, and has plenty of products to offer. Whether you’re new to the investing world or make trades often, E-Trade offers a comprehensive lineup of trading platforms and user-friendly apps, plus a wide selection of educational resources.

However, there are still fees for specific types of accounts and features. You also won’t get much of a bonus for moving your money to E-Trade — unless you have tens of thousands of dollars.

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The Bottom Line: E-Trade is a good choice for both active traders and beginning investors.

  • Choose between two customizable, feature-rich trading platforms.
  • Offers strong customer support via chat, email, phone, or more than 30 local branches
  • There is a minimum balance to open non-retirement accounts.

Who should consider E-Trade

E-Trade has solid offerings for both beginning and advanced investors. If you’re a frequent trader who needs both mobile and online platforms, E-Trade is a good choice.

Beginner investors will like E-Trade’s streamlined trading platform, many zero commission trading options, and its broad selection of commission-free mutual funds, which make diversification cheaper and simpler. And, for those who want a little more help, E-Trade provides pre-built portfolios for mutual funds and ETFs (minimum $500 and $2,500, respectively).

For advanced investors, E-Trade offers customizable trading tools and ample charting options. A full range of investment choices including stocks, options and futures allows advanced traders to take diversification to the next level.

E-Trade fees and features

Stock trading fees
  • $0.00 per trade
Amount minimum to open account
  • $500
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures/Commodities
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $75 full account transfer fee
  • $25 partial account transfer fee
  • $0 yearly inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Mobile appiOS, Android
Customer supportPhone, 24/7 live support, Chat, Email, 30 branch locations
Research resources
  • SEC filings
  • Mutual fund reports
  • Earnings press releases

E-Trade trading platforms and tools

E-Trade offers two trading platforms: E-Trade‘s website and Power E-Trade. There are also two mobile apps: The E-Trade Mobile app and the Power E-Trade app.

The standard E-Trade web platform is for investors who are just starting out and new to investing basics but still want to manage their own portfolio. You can make trades, handle money transfers, check real-time quotes and commentary and get independent research from top news organizations.

The standard platform also gives you access to investment screeners, analyzers, backtesters and optimizers. If you’re new to investing or just need a refresher, there’s a library of articles and videos to help you educate yourself on the investing journey. There’s also access to market trends and active trader analysis.

Power E-Trade gives advanced investors risk/reward analysis and technical pattern recognition, helping users explore possible scenarios before they buy. A practice account option lets you trade stocks, options and other securities without risking real money.

E-Trade investment options

E-Trade lets you invest in a wide variety of asset classes, including:

  • Stocks (including non-U.S. stocks and penny stocks)
  • Bonds
  • CDs
  • ETFs
  • Fixed income
  • Mutual funds
  • Commodities
  • Gold, silver, other precious metals
  • Bitcoin and cryptocurrency
  • Futures

E-Trade charges no commissions on buying or selling U.S. stocks, ETFs, U.S. Treasuries and new-issue bonds. There are trade fees for the following asset classes, including:

  • Bonds and CDs: There is a $10 minimum/$250 maximum commission per bond trade (except U.S. Treasuries and new-issue bonds) and for brokered CDs.
  • Futures: $1.50 per contract on futures and options on futures (except Bitcoin futures).
  • Options: $0.50 per contract on equity and index options when you place more than 30 stock, ETF, or option trades per quarter. Otherwise, it’s $0.65 per contract. It’s also $1.50 per contract for future options.

Fees for things like paper statements ($2), account transfers ($25-$75) and insufficient funds ($25), also apply.

E-Trade Core Portfolios

E-Trade Core Portfolios is the company’s robo-advisor platform. When you start with Core Portfolios, you’ll answer a short form with nine questions to verify what type of investor you are, what sort of risk tolerance you have, and your timeline until retirement. Core Portfolios then recommends two investment portfolios, comprising of ETFs selected by the firm’s experts.

E-Trade doesn’t disclose the specific funds that make up each portfolio, although it does outline the portfolio’s asset allocation, plus a look at the 15-year historical returns for average, best-case and worst-case scenarios. The two options you’re presented with include a recommended portfolio and an alternative portfolio. All portfolios maintain a 1% cash allocation.

Because it’s an E-Trade product, you have the option to talk to an advisor at any of the company’s 30 branches. Some other robo-advisors don’t offer personalized human interaction, so this is an additional perk for hands-off investors.

Keep in mind that you need $500 to get started, with a 0.30% annual advisory fee. Other robo-advisors, like Betterment, don’t have account minimums and charge slightly lower annual advisory fees.

Strengths of E-Trade

  • Robust mobile and online apps: E-Trade offers two mobile apps and two online trading platforms. These apps and programs offer customizable account management, real-time quotes and access to news on demand. E-Trade’s purchase of OptionsHouse in 2016 also means skilled traders can easily access technical studies, charting tools and simple trade tickets to make high-volume trading easy.
  • Branch network: If you prefer in-person customer service and support, you’ll like the fact that E-Trade has more than 30 branches nationwide.
  • No required minimum to start: For taxable brokerage accounts, there are no minimum funding requirements.
  • Deep research. Before you even get started with E-Trade, you’ll have access to finding out which accounts work for you. Once you’re set up, read through research, market news, screeners and how your investments align with trends.

Drawbacks of E-Trade

  • Robo-advisor costs are higher. While a $500 starting investment isn’t much to get started with Core Portfolios, robo-advisor competitor Betterment doesn’t have a minimum to get started. Along with that, E-Trade charges a 0.30% annual advisory fee. That’s higher than the 0.25% charged by some competitors.
  • High minimum deposit required for account opening bonus: E-Trade touts its bonus incentives for depositing and transferring funds to its platform. However, you need to transfer very large balances to E-Trade to get the highest bonuses, so be sure to read the fine print first. For instance, to get the $600 bonus, you’ll need to deposit or transfer at least $250,000.
  • Some funds not offered. You’ll find plenty of offerings through E-Trade, as well as many different types of accounts to choose from. But you won’t find forex offerings from this company.

Is E-Trade safe?

If you’re looking for a safe platform to invest money, you have no worries with E-Trade. E-Trade bank accounts are FDIC-insured and they are compliant with all registration and license requirements. E-Trade is also a SIPC member, which means your account is protected for up to $500,000 in cash and securities.

Of course, while your accounts are protected in the event that E-Trade faces financial troubles, this doesn’t mean you can’t lose money in investment accounts. Stocks, bonds and other securities can decline in value and there’s always a risk associated with investing. That’s why it’s so important to understand any investments before you buy them.

Final thoughts

E-Trade offers options for novice investors and more experienced traders, including two different trading platforms and two mobile apps. Despite the account minimums and some fees that are higher than competitors, E-Trade is still a solid choice for most investors. If you don’t have the minimum amount to get started on any of the accounts that require it, you may want to look elsewhere. Otherwise, you have plenty of great options with E-Trade.

Fees mentioned in the article are accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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When Should You Stop Contributing to Your 401(k) Plan?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.

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Unexpected personal expenses can disrupt your budget, and too much credit card spending can push your debt balance into the red — at times like these, you might consider pausing contributions to your 401(k). Although saving for retirement should always be one of your core financial goals, there are times when you may need to stop contributing to your 401(k) retirement plan. Read on, and we’ll review them all.

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When your employer doesn’t offer matching 401(k) contributions

One of the biggest benefits offered by the 401(k) is matching contributions. With matching contributions, your employer matches the money you deposit in your 401(k) dollar-for-dollar, up to a certain threshold. This helps turbocharge your retirement savings at no extra cost to you.

However, not all employers offer matching contributions. You can still contribute to your 401(k) even if your employer doesn’t offer a match, but a lack of matching contributions might make you consider other retirement savings options, such as an individual retirement account (IRA), depending on your savings goals.

When your 401(k) fees are too high

If your employer doesn’t offer matching contributions, a good way to gauge whether the 401(k) plan is a good choice for your retirement savings is to look at the fees. If the fees charged by your employer’s 401(k) plan are higher than you like, consider other retirement savings options.

Fees charged by 401(k) plans fall into three broad categories: investment fees, 12b-1 fees and administrative fees.

  • Investment fees: These fees cover the cost of managing the investments and are disclosed in mutual fund or ETF prospectuses. Some funds charge a load fee, which is an industry term for a sales charge or commission. This can be charged up front, in which case it is called a front-end load. Or, it may be paid when the shares are sold, known as a back-end load or redemption fee.
  • 12b-1 fees: This is a type of investment fee, named after the Securities and Exchange Commission (SEC) rule requiring its disclosure. This fee covers a mutual fund’s marketing and distribution costs, and broker commissions. Some mutual funds charge a 12b-1 fee in place of a load fee.
  • Administrative and service fees: Typically charged as flat fees, these cover the costs of administering the plan, or special add-on costs for 401(k) loans or hardship withdrawals. Administrative fees run to a few hundred dollars per participant, per year. They may not always be disclosed.

Total fees charged on your 401(k) can range from 10 basis points to 2% to 3%. You pay the plan administrator these fees out of your investment balance, and while a few percentage points a year may not sound like much, these fees add up over the life of your 401(k).

Imagine a 29-year-old investor who contributes $19,500 per year to her company’s 401(k) and plans to retire at age 65. Her current 401(k) balance is $100,000, and fees are 3%. Just by switching to a plan that cuts fees in half, to 1.5%, she could save $845,569 by the time she retires. Instead of having $1.9 million upon retirement, she could have more than $2.7 million.

Check out the fee calculator we used to find out just how much your fees are costing you
Remember, even if your 401(k) has high fees, an employer match is still worth considering. Many times, the match will more than cover the fees.

When you have too much debt

While it’s always possible to both pay down debt and make 401(k) contributions, large debt loads charging high interest rates may require more budgetary attention. Very high APRs from your credit card issuers or a debt-to-income ratio that’s too high may mean you should prioritize paying off debt ahead of saving for retirement.

The key thing to consider is how much you’re paying in interest on your debt compared to the returns you’re getting on your investments. If you’re paying an APR of 15% to 20% to a credit card company but you’re only seeing an annual return of 5% to 8% on your 401(k) investments, you may be losing money. That said, pausing contributions to accelerate your debt payoff means you’ll need to play catch-up on your retirement savings later.

When your expenses are too high

Sometimes life gets in the way of your financial goals, especially when emergency spending disrupts your budget. We always advise our readers to build a healthy emergency fund to be prepared for large, unexpected costs or major medical emergencies, but if your fund is low or non-existent, it might be time to hit pause on your 401(k) contributions.

Think hard about expenses that are high enough to make you consider pausing your 401(k) contributions. Can you meet them by cutting out other spending, or refining your budget? Our rule of thumb for when to dip into your emergency fund holds good here as well: Ask yourself whether the expenses are unplanned and uncontrollable. Only true emergencies that are both unplanned and uncontrollable should require you to stop contributing to your 401(k).

When you retire from your job

The ultimate end point to your 401(k) contributions is when you stop working. Remember, 401(k) plans are sponsored by your employer, so when you retire and stop working, your days of making contributions to your 401(k) plan are over. However, this may not be the end of your retirement savings journey.

What happens when you stop contributing to your 401(k)?

Halting 401(k) contributions might be financially necessary, but you should keep in mind what you’re giving up in exchange.

  • You stop reducing your taxable income. Your 401(k) contributions are made with pre-tax dollars from your salary, lowering your taxable income. This can either bump up your refund or lessen what you owe. If you aren’t making contributions, you don’t have the opportunity to reduce your taxable income. This might mean your tax return won’t be as high next year or you could end up owing money.
  • You could miss out on employer 401(k) matching contributions. If your employer makes matching 401(k) contributions, you’re missing out on the extra 401(k) pay bump. Regardless of how much or little your employer contributes, you won’t get to take advantage of the money from matching contributions.

Keep saving when you stop contributing to your 401(k)

If you stop contributing to your 401(k), that doesn’t mean you should stop saving altogether. Keep saving in these other accounts if you have the money to spare:

  • High-yield savings account: If you want to put money away but still have access to it right away, try a high-yield savings account. APYs for these types of accounts are much higher compared to regular savings accounts: sometimes as high as 2.00% versus 0.10%, respectively. This type of account is good for building up an emergency fund or other types of savings that you can immediately tap into.
  • Certificate of deposit (CD): If you have the chance to allow savings to grow for a set amount of time, try a CD. You’ll deposit your funds into an account but won’t have access to it for a set term — sometimes six months, sometimes two years. In that time, you could earn a higher yield compared to a regular savings account or high-yield savings account, depending on the amount you deposit and where you make your deposit.
  • Taxable investment account: If you want to try out investing and have some extra cash to do so, try an investment account. A brokerage account is good for hands-on investors, while a robo-advisor is a good fit for hands-off investors or those who don’t have the time or knowledge to buy individual securities.
  • Individual retirement account (IRA): Whether you go the traditional or Roth IRA route, you can put money away into a personal retirement account that isn’t tied to your job. While the contribution limit for IRAs is lower than it is for 401(k)s, you can still put money away for retirement without using your employer-sponsored plan. This is also a good idea if you eventually leave your job (or lose your job) and need to transfer funds from your 401(k) into an IRA.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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How and Where Should I Open an IRA?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.

Written By

You can open a traditional IRA or a Roth IRA from a wide variety of account providers, including banks and credit unions, brokerages and robo-advisors. Taking into account your retirement needs and your investing style will help you decide where to open an IRA. This guide aims to help you determine what kind of IRA is right for your goals and then show you where to open an account.

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Should I choose a traditional IRA or a Roth IRA?

Traditional IRAs and Roth IRAs are the two main varieties of individual retirement account. Which one you choose depends on when you’ll need to start taking out money in retirement and certain tax considerations.

With a traditional IRA, contributions you make into the account reduce your taxable income, and money in the account grows tax-free over the years. The withdrawals you make in retirement are treated as taxable income. And required minimum distributions (RMDs) begin at 72 years of age — so whether you need the money or not, you must start taking minimum annual withdrawals from your traditional IRA.

Contributions to a Roth IRA are made after you pay income tax, and contributions do not reduce your taxable income. The money grows tax-free in the account, and withdrawals are free of income taxes in retirement. There are no required minimum distributions with a Roth IRA — you can even choose to leave the funds untouched in the account and bequeath them to your descendants in your will.

  • If you anticipate that your taxes are higher when you are making contributions than they will be in retirement, choose a traditional IRA. The money is pre-tax, and contributions help reduce your income taxes. Typically people in higher tax brackets should consider a traditional IRA, to reap the benefits of the tax deduction.
  • If you anticipate that your taxes are lower when you are making contributions than they will be in retirement, choose a Roth IRA: Pay lower taxes on the money you contribute now, and skip the higher anticipated taxes in retirement. Typically younger people should consider a Roth IRA when their income tax bracket is lower.

Where should I open an IRA?

Deciding where to open an IRA depends on whether you are a hands-on investor or a hands-off investor.

  • Hands-on investors understand markets, know what assets to include in their portfolios and have the skills needed to manage their portfolios over the long term. Time and patience are needed to be a hands-on investor.
  • Hands-off investors may be relatively new to markets or may not have enough experience to be comfortable managing portfolios themselves. Alternatively, a hands-off investor may not have the time necessary to personally manage investments.

IRA providers for hands-off investors

If you’re a hands-off investor, a good option would be to open an IRA with a robo-advisor. These low-cost, automated investing platforms assess your risk tolerance, determine your expected retirement age and ask other questions about your expectations. Your answers help the robo-advisor build a portfolio of investments tailored to your needs and goals — and once your portfolio is set up, the robo-advisor manages it for you. Savers with less investing knowledge and expertise can rely on a robo-advisor as a low-cost way to manage an IRA.

IRA providers for hands-on investors

If you’re a hands-on investor who wants to manage your own retirement funds, you should explore opening an IRA at an online brokerage. These conventional investing platforms let you select the securities and assets that make up your portfolio, which you actively guide through good market conditions and bad. It takes a little more time and effort, but those with skills and patience could yield higher returns.

What should I look for in an IRA provider?

As you go through the process of evaluating IRA providers, ask yourself these questions:

Are you a conservative investor, or are you comfortable with more risk?

Very conservative investors should check out banks and credit unions, which offer IRA savings accounts and IRA CDs. These deposit accounts are ultra-safe but low-yield investments that receive Federal Deposit Insurance Corp. (FDIC) coverage. If you are comfortable with more risk and want higher yields from your IRA, choose a brokerage account. Brokers offer a variety of market-traded assets, like stocks and ETFs. If you have a moderate risk appetite, you can open an IRA with a broker and choose fixed-income investments.

How much money do you have to invest?

Not all IRA providers have the same minimum investment thresholds. Robo-advisor Wealthfront has a $500 minimum balance requirement to open an account, while competitor Betterment has no minimum balance requirement. Some Vanguard funds require a minimum investment of $3,000. Personal Capital has a minimum investment threshold of $100,000.

How much do IRA providers charge in fees?

Wealthfront and Betterment charge a percentage of the total amount in your account as their annual management fee. Other platforms, like Blooom, charge a flat annual management fee. With a flat fee, the fee is a bigger percentage of your total portfolio at the outset, when there’s less money in your account, and then it becomes a smaller percentage of the total portfolio as your investment amount grows.

With a fee based on the percentage of assets you have invested, the amount you are paying in fees grows in lockstep with your balance. If you open an IRA with a broker, you could end up paying little to nothing in fees, as many offer fee-free or very-low-fee mutual funds and ETFs — although you’ll need to screen your investment choices yourself.

What assets do you want to invest in?

This comes down to what type of investor you are. Higher-risk securities include stocks and ETFs, while lower-risk choices include bonds and bond ETFs. Meanwhile, bank IRAs are virtually risk-free. Depending on your age and how much risk you’re willing to take, you may end up having a mix of many different types of securities. To be safe, diversify your portfolio and manage your asset allocation accordingly. See which companies offer you the best mix you’re looking for and which ones line up with your values and financial goals.

How to open an IRA

Nearly all IRA providers offer both traditional IRAs and Roth IRAs. Visit the website of your IRA provider of choice or download their mobile app, and complete the registration process.

With a broker, you will be asked to customize your own portfolio, although most brokers provide educational resources to help you choose. Younger investors usually choose riskier securities like stocks. The closer you are to retirement, the less risk you should take on, so choose more fixed-income assets.

How to fund your IRA

Although some companies require an account minimum upon opening, you’ll need to make regular contributions to see your IRA grow. You have the opportunity to fund your IRA a few different ways, including:

  • Paycheck deductions: You can set up automatic paycheck deductions to fund your IRA of choice. Talk to your employer to see whether they make this option available.
  • Monthly payments: If your employer doesn’t offer automatic payroll deductions, you can make regular monthly IRA contributions. Either handle the contributions manually as part of your monthly budget process or set up automatic payments from your bank account.
  • Rollover retirement plan: If you’ve recently switched jobs, you might have a 401(k) with your old employer. You can roll that over into an IRA. An IRA rollover requires several steps, depending on your old 401(k) and your new provider. If you have an old IRA, you can move that over as well. While you’re allowed to have multiple IRAs, your $6,000 contribution limit is for all of them — not just each one you have.

You can also have a mix of ways to contribute to your IRA. For instance, if you get a bonus at work and want to put it toward your IRA, you can make a one-time contribution on top of your regular payouts.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.