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Investing

Robinhood vs. E*TRADE: Which Should You Choose?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

When deciding between two online brokers, the best choice is always the one that allows you to invest successfully at the lowest cost. With its free trades for virtually all asset classes but minimal resources or managed account services, Robinhood is for investors who do their own research and are simply looking for a place to make trades cheaply. E-Trade is for investors who want the full investment experience, access to research and other plenty of account services — and are willing to pay for it. Read on for all the details.

Robinhood vs. E-Trade: Feature comparison

RobinhoodE-Trade
Current promotionsShare of stock for new customers who are referred by an existing Robinhood account holder

For customers who deposit at least $10,000, E-Trade offers up to 500 commission-free trades for each stock or options trade executed within 60 days of funds becoming available.
For new accounts with a deposit of at least $25,000, you'll also receive a cash bonus, which can range from $200 to $2,500 depending on the amount deposited.

Stock trading fees
  • $0 per trade
  • $6.95 per trade (less than 30 trades per quarter)
  • $4.95 per trade (more than 30 trades per quarter)
Amount minimum to open account
  • $0 per trade
  • $500
Tradable securities
  • Stocks
  • ETFs
  • Options
  • Crypto-currency
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures/Commodities
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $75 full account transfer fee
  • $0 inactivity fee
  • $0 annual fee
  • $75 full account transfer fee
  • $25 partial account transfer fee
  • $0 yearly inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • 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
  • SEP IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
 
 
Mobile appiOS, AndroidiOS, Android
Customer supportEmailPhone, 24/7 live support, Chat, Email, 30 branch locations

Robinhood vs. E-Trade: Fees & account minimums

Some brokers charge an annual or monthly fee to maintain your account. Neither Robinhood or E-Trade impose such a fee. And neither charges a fee if your account is inactive during the year. However, while Robinhood requires no minimum balance to open an account, E-Trade imposes a $500 minimum.

At Robinhood, stock trades are free of commissions. E-Trade charges a flat fee for each stock trade. The charge is $6.95 a trade for the first 30 transactions in a quarter. When you make more than 30 transactions per quarter, E-Trade drops its commission to $4.95 per trade. This feature makes Robinhood far less expensive for active traders. Robinhood’s commission-free trading includes listed options, ETFs and cryptocurrency. Note that E-Trade offers a range of commission-free exchange traded funds (ETFs) and the ability to purchase mutual funds without a transaction fee. At present, Robinhood does not offer access to any mutual funds.

Robinhood does not currently offer professional account management services. At E-Trade, annual fees for account management range from 0.30% to 0.90% of assets under management, depending on what services the investor chooses.

Both Robinhood and E-Trade charges a $75 fee for a full account transfer. While Robinhood does not list a separate fee for partial account transfers, E-Trade imposes a $25 fee for a partial transfer.

Many online brokers offer special incentives to attract investors. With its free commissions on stocks, options, ETFs and cryptocurrency, Robinhood does not offer any special incentives. At E-Trade, however, you get $600 and up to 500 free trades for a $10,000 deposit. Offers may vary over time.

Robinhood vs. E-Trade: Tradable securities

In addition to trading stocks and bonds, both Robinhood and E-Trade offer their customers a range of investable asset classes to choose from. At E-Trade, the range of securities offered is wider and more diverse.

  • Mutual funds: Robinhood does not offer investors access to any mutual fund products. For investors interested in the professional management that mutual funds offer, at E-Trade you can invest in more than 4,400 mutual funds with no transaction fee. This makes E-Trade significantly better for investors who want to buy mutual funds.
  • Options: An option allows an investor to sell a security at a predetermined price for a certain period of time. At Robinhood, listed option trades are free. At E-Trade, investors can trade options at regular commission rates plus an additional fee of $0.75, which drops to $0.50 with 30 or more trades per quarter.
  • ETFs: Including ETFs in your portfolio is a great way to add an element of diversity. Robinhood offers ETF trading free of commissions. E-Trade gives investors access to more than 250 ETFs free of commission. This makes Robinhood significantly less expensive for ETF traders.
  • Foreign exchange trading. Neither Robinhood nor E-Trade offer access to foreign exchange trading.
  • Futures. If you decide to trade in futures you are essentially agreeing to sell a security or other asset at a set price at a predetermined time in the future. Robinhood does not make futures trading available to its investors. E-Trade offers futures trading for $1.50 per transaction.
  • Cryptocurrency. This is another of the products that Robinhood offers free of commission. The firm offers cryptocurrency in 38 states and Washington, D.C.
    E-Trade does not offer the ability to invest in cryptocurrency.

Robinhood vs. E-Trade: Special features

E-Trade offers two levels of managed account services. Core Portfolios is the company’s robo-advisor product, which offers you an automated portfolio of ETFs that are customized to your investment goals. To get started, just complete a five-minute online questionnaire, which includes information about your goals, timelines and attitudes about risk. The minimum investment is just $500 and the annual fee is 0.30% with no commissions.

Blended Portfolios is E-Trade’s second level of managed accounts. Investors work with a financial consultant to tailor a portfolio that meets their needs, however you need a $25,000 minimum balance to gain access to Blended Portfolios. As of the date of publishing, annual management fees range between 0.65% and 0.90%, depending on the total amount of money you invest in the program.

Robinhood advantages

When considering Betterment versus Acorns, here are some of the advantages that come with opening a Betterment account.

  • Robinhood’s primary advantage is its commission-free trading in stocks, options, ETFs and cryptocurrency. This can be a significant advantage for high-volume active traders who aren’t looking for other services such as managed accounts, access to mutual funds and research information (all of which E-Trade offers).
  • At Robinhood, investors can invest in cryptocurrency. This is not the case at many online brokers, including E-Trade. An added advantage is that Robinhood does not charge a commission for cryptocurrency trades.
  • Robinhood has an easy-to-use website that makes trading with the firm quick and easy. You can literally be trading within minutes.

E-Trade advantages

  • If you are a high-volume stock trader, after you do 30 trades in a quarter, the cost per trade drops to $4.95 from $6.95.
  • While stock, option and ETF trading at Robinhood is free, investors are mostly on their own without support and research services beyond its daily “Robinhood Snacks”, a quick read newsletter for financial news. E-Trade offers its clients access to solid research tools including market news, recordings and transcripts of earnings calls as well as the ability to analyze companies with fundamental stock research, technical research and bond, mutual fund and ETF research tools.
  • E-Trade has a “better” bonus for new clients. For a deposit of only $10,000 you get $600 and up to 500 free trades. While stock, bond and ETF trading is free at Robinhood they don’t offer any cash bonuses.

Robinhood vs. E-Trade: Which is best for you?

In the final analysis, the differences between Robinhood and E-Trade are fairly stark. If you are simply looking for a trading platform to trade stocks and other securities that you research on you own at virtually no cost, then Robinhood is the choice for you. But if you want your brokerage firm to support your investment efforts with research, a fuller range of investment products including thousands of mutual funds and the ability to access and consult with professional management, then E-Trade is likely to be a better option.

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.

Peter Fleming
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Peter Fleming is a writer at MagnifyMoney. You can email Peter here

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Investing

Best Roth IRA Account Providers of 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Roth individual retirement accounts (IRAs) are a powerful vehicle for retirement savings. That’s because in a Roth IRAs your money grows tax free. Here’s how it works: You deposit money into your Roth IRA on which you’ve already paid income taxes, you earn interest on those funds over the life of the account and withdrawals are not taxed as income — unlike withdrawals from traditional IRAs. There are other benefits of a Roth IRA: No required distributions, unlimited deposits for qualifying individuals, and lenient early withdrawal rules.

For many investors, Roth IRAs are an important component of a well-planned retirement strategy. But where should you open your Roth IRA? There’s no shortage of brokerages that want your retirement dollars, and this embarrassment of riches can make deciding difficult. We have surveyed the field of options and narrowed the list to the best Roth IRA accounts for both active investors and more hands-off savers. Read on for our review.

How we chose the best IRA account providers

To arrive at our list of the best Roth IRA accounts, we thoroughly reviewed the broker and robo-advisor landscape. In our latest round of research, we evaluated 39 different product offerings. For each product we collect dozens of different data points from fees, to portfolio construction, customer service, research offerings, account minimums and firm reputation.

For our rankings for the best Roth IRAs for active investors, the most important criteria were trading fees, account minimum, the diversity of investment products offered (stocks, bonds, ETFs and mutual funds) and low account fees (yearly fees, transfer fees and inactivity fees).

For our rankings for the best Roth IRAs for hands-off investors, the most important criteria were management fees and account minimums and considered ease of use and customer support. See our methodology article for more details on how we created our rankings.

Best Roth IRAs for hands-off investors

Many folks do not have the time, interest, or expertise to invest their money themselves. The great news is that you actually don’t have to. You can hire a robo-advisor to do the job for you. For a competitive annual management fee plus the expenses of the selected funds — usually totalling 0.35% to 0.50% of your portfolio per year — a robo-advisor will invest your money in a portfolio tailored to your financial goals. See below for our picks for best robo-advisors for Roth IRAs.

 Annual Management FeeAverage Expense Ratio (moderate risk portfolio)Account Minimum to Start
Fidelity Go$0Close to 0.00%*$0
E-Trade Core Portfolios$0Close to 0.00%*$500
Wealthfront$00.09%$500
Ally Invest Managed Portfolios$00.08%$100

*Most of the Fidelity Go portfolios are composed of Fidelity Flex funds, which have 0.00% expense ratios. A small amount is held in the Fidelity Government Cash Reserves Fund, which does come with some expense charges. However, some of those fund expenses may be offset by a “variable fee credit”. See Fidelity’s FAQs for more.

Fidelity Go — Transparency and low costs

Fidelity Brokerage Services, LLC What you see is what you get with retirement powerhouse Fidelity’s robo-advisor Fidelity Go. Fidelity charges a 0.35 % annual management fee and close to 0% in expense ratio fees. Considering that almost all robo-advisors pass on to customers ETF expense ratio fees — they range from 0.08% to more than 0.15% a year — Fidelity helps you feel confident you’re lining your own pockets, not the fund manager’s. With no minimum account size and no fees to transfer money in or out of your account, it’s easy to get started whether you’re scraping together Washingtons or swimming in Benjamins. One note of caution: Fidelity Go does invest solely in Fidelity-owned funds, so if you are a conservative investor, you may want to consider also investing with a robo-advisor that spreads your investments across different fund companies.

Fidelity Go Highlights:

  • Low fees: 0.35% management fee and almost 0.00% expense ratios. Fidelity invests most of your money in their proprietary Fidelity Flex funds, which have 0% expense ratios and are only available to select customers. The company also provides rebates to offset the fees they charge to hold other funds.
  • Size and experience: Fidelity is one of the biggest retirement brokerages in the US. The firm manages money for over 30 million customers, so your investment will be in very experienced hands.
  • Both human- and robot-managed funds. The funds in Fidelity Go portfolios are a blend of actively managed and passively managed funds, so you get the advantages of both investing approaches.
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E-Trade Core Portfolios — Smart beta and SRI portfolio options

E-Trade Securities LLC You may know E-Trade from their talking baby commercials, however robo-advisor Core Portfolios is more than just clever marketing. Low total fees — a 0.30% management fee and an average expense ratio of 0.06% — plus a low $500 minimum balance make it easy to start investing and keep investing with Core Portfolios. One aspect that sets E-Trade apart is their diversity of portfolio options. Investors can choose between three different portfolio sets: core portfolios, socially responsible portfolios, or smart beta portfolios, each of which includes a mix of equities designed to meet more tailored investing goals. One item to watch out for with E-Trade retirement accounts are penalty fees: They charge $25 for early IRA distributions, if you need to recharacterize an IRA contribution to a Roth IRA, or if you accidentally overfund your Roth IRA.

E-Trade Core Portfolios Highlights:

  • E-Trade does not invest your dollars in their own proprietary funds, reducing potential conflicts of interest. Some investors prefer this approach, which is the opposite tack to the one taken by Fidelity, for example.
  • Socially responsible investing (SRI) and smart beta portfolios provide options for investors who want to tailor their IRAs for specific goals. SRI strategies allow you to put your money to work with only vetted socially and environmentally responsible companies, while smart beta attempts to outperform more conventional funds with frequent reweighting of equity holdings.
  • Low fees: 0.30% management fee and 0.06% avg expense ratio.
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Wealthfront — Premium strategies for large accounts

Wealthfront Advisers LLC Wealthfront is one of the pioneers of the robo-advisor movement, and their continued commitment to ultra-low fees makes them an attractive place to grow your Roth IRA. The annual cost is a 0.25% annual advisory fee on investments management fee plus an average expense ratio of 0.07% to 0.16%, which is in line with other leading robo-advisors. If you’re looking for guidance, Wealthfront offers a suite of free tools to help you plan for retirement and other major financial life events. Since Wealthfront is all-digital, face-to-face interaction isn’t an option, which some folks may love — or dislike. If you want to shoot the breeze with your broker at their desk, other options may suit you better.

Wealthfront Highlights:

  • Premium investment strategies available for investors with large accounts including Risk Parity for accounts over $100,000 and Smart Beta for accounts over $500,000.
  • A minimum deposit of only $500 to open an account makes Wealthfront accessible for beginning investors.
  • Free financial planning tools for retirement, college savings, college and time off for travel.
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Ally Invest Managed Portfolios — Automatic portfolio rebalancing, extra account options

Ally Financial Inc. Like a trusted family member, Ally Invest Managed Portfolios will babysit your retirement savings so that you can go have more fun — it’s up to you whether that means hiking an extra mile in the woods or rehearsing your Elvis impression for karaoke. Ally’s robo-investing service offers ETF portfolios diversified across five different asset classes to give you the best chance at growth, while keeping fees to a minimum. Ally offers 24/7 support as well, which means that you’ll never be on your own if you have to sort out a complicated retirement question. One drawback with Ally is that, once you deposit money in a Roth IRA, they charge you fees if you try to transfer or close an account — $50 for a full or partial account transfer or $25 to close an IRA account.

Ally Invest Managed Portfolios Highlights:

  • Low, $100 minimum deposit makes it easy to start investing for retirement.
  • Automatic portfolio rebalancing adjusts for market swings, ensuring that your portfolio matches your priorities.
  • Ally offers many services beyond Roth IRAs, including a savings account with a 1.90% APY, traditional brokerage accounts, CDs, and money market accounts.
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Best Roth IRAs for active investors

The brokers below offer up a universe of retirement investing options for investors who are confident making more of their own investing decisions. If the idea of choosing the stocks, bonds and funds for your retirement sounds exciting – and you have the time to devote to it – a Roth IRA account with one of the brokers below will allow you to avoid management fees and keep more of your retirement dollars to yourself.

 Fee per tradeCommission-free ETFsCommission-free ETFs
Fidelity$4.955033,636
Charles Schwab$4.955143,457
E-Trade$6.952774,222
TD Ameritrade$6.955713,985

Fidelity — Best overall offering

Fidelity Brokerage Services LLC It is not by chance that Fidelity leads our rankings for Roth IRAs, both for active investors and hands-off investors. In terms of investing selection, Fidelity has very robust offerings for retirement investors, including over 3,600 no-transaction-fee mutual funds and over 500 commission-free ETFs. There is no minimum deposit to open an account, and while Fidelity’s $4.95 per trade fee is not the lowest in the industry, it is on the low end. Fidelity does not attempt to lock you in to their service, charging no fees to transfer funds or close your account. While their website and app may not have the bells and whistles of some of the newer brokerage startups, Fidelity remains a cornerstone for retirement investors with solid offerings and low fees.

Fidelity Highlights:

  • Low fees: Fidelity charges a $4.95 per trade commission and no fees to transfer funds or close accounts.
  • Fidelity’s proprietary ZERO funds charge 0.00% in expense ratios: This means that every penny of growth stays right in your portfolio.
  • Helpful retirement planning tools and dashboards: These tools help you build a retirement savings plan and stay on track.
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Charles Schwab — Best customer service

The Charles Schwab Corporation The buddy system isn’t just for kids, it’s actually great for retirement planning. Charles Schwab stands out among its peers for IRA customer support, with a dedicated IRA phone line to help answer questions and free consultations with Schwab fixed income specialists, which is a great resource for investors close to retirement. The smorgasboard of investing options that Charles Schwab offers through its Roth IRAs should be enough to satisfy any retirement planner. It’s easy to start, with $0 minimum deposit to open an account, and $4.95 per trade commissions should keep your piggy bank intact. One caveat to keep in mind is Schwab’s transfer fees. It costs $25 to partially transfer an account to another brokerage and $50 to transfer an entire account.

Charles Schwab Highlights:

  • Excellent customer service: Schwab offers a dedicated IRA phone line, 24/7 support and over 350 branch locations for in-person consultations.
  • Strong low-fee investment selection: The firm gives investors access to over 500 commission-free ETFs and more than 3,400 no-transaction-fee mutual funds.
  • A broad selection of educational resources: Schwab’s handy retirement calculators and investing educational resources help you make a retirement plan and keep the plan on track.
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E-Trade — Great mutual fund selection

E-Trade Securities LLC Opening a Roth IRA at E-Trade is simple with no minimum deposit required to start. Once you are in the door, low-cost choices abound: E-Trade offers over 4,200 no-transaction-fee mutual funds and over 270 commission-free ETFs, accompanied by planning tools and screeners to help you make the right selections for your retirement portfolio. The standard trading commission, $6.95 per trade (less than 30 trades per quarter), is on the high side, though this drops to $4.95 per trade (more than 30 trades per quarter) if you trade more than 30 times per quarter. Fees can sneak up on you if you are not careful, so keep an eye out. E-Trade charges a $25 penalty if you overfund an IRA, if you need to recharacterize an IRA contribution, or if you want to make early IRA withdrawals.

E-Trade Highlights:

  • Trading bonuses: Cash bonuses and 500 free trades available for new accounts with deposits of more than $25,000 within the first 60 days.
  • Wide selection no-fee funds: E-Trade gives investors access to more than 4,200 no-transaction-fee mutual funds and over 270 commission-free ETFs.
  • Powerful mobile trading apps: E-Trade gives you access to charting tools and research materials for when you’re on the go.
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TD Ameritrade — Best investment selection overall

TD Ameritrade The smorgasboard of investing options at TD Ameritrade is enough to satisfy even the largest appetite for retirement investing. TD Ameritrade’s low-fee offerings are impressive with over 500 commission-free ETFs and over 3,900 no-transaction fee mutual funds. TD also provides free analyst reports, tools and watch lists in order to help you sift through these plentiful options. With retirement-specific fees TD Ameritrade generally scores well, with no fees for early withdrawals, over-contributing or recharacterizing IRA contributions. TD Ameritrade’s trading fees are on the high side at $6.95 per trade, so if you plan to trade a lot you may want to consider lower-cost brokers.

TD Ameritrade Highlights:

  • Useful retirement planning resources: TD offers its users a plethora of retirement planning resources, including calculators, educational videos and webcasts.
  • Trading bonuses for large accounts: The firm rewards investors with up to 500 free trades for the first 60 days and cash bonuses for deposits of $25,000 or more.
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Individual retirement account FAQs

What is a Roth IRA?

A Roth IRA is an after-tax investment account, meaning you deposit dollars into your account on which you’ve already paid taxes. Your funds grow tax-free over the life of the account, and you receive qualified tax-free distributions in retirement. A big benefit is that there are no required minimum distributions (RMDs), meaning that you are not required to withdraw funds at age 70 ½. There are also no age restrictions for contributing to a Roth IRA, so as long as you have earned income you can contribute.

In order to make tax-free withdrawals, five taxable years must have elapsed since contributions were first made to the account, and one of the following secondary criteria must also be met:

  • The account owner reaches age 59 ½.
  • The account owner becomes disabled.
  • The account owner meets the IRS’ first-time homebuyer qualifications.
  • The account owner dies, and distributions are made to a beneficiary or the estate.

Roth IRAs are good vehicles for passing on tax-free assets to beneficiaries and heirs because they aren’t subject to required distributions, so they can grow until the account owner’s death.

What should I look for when comparing brokerages for Roth IRAs?

With a large number of brokers to choose from, you need to do research to ensure you choose the best Roth IRA account for your needs. Here are a few factors to compare during your search:

  • Annual fees: Brokers assess an annual fee for Roth IRAs, often expressed as a percentage of the assets under management. Although this fee may be as low as 1% and may seem negligible, as your account grows, that small percentage can become quite a chunk of change. You can start your search by looking for accounts with the lowest annual fees possible. Some providers don’t charge any annual fees and instead make money from trades and commissions.
  • Minimum initial funding: Does the Roth IRA provider require a certain minimum initial deposit to get started, and if so, can you afford it? If you have a decent stash of funds to invest, you also could look for bonuses and promotions, where the account provider gifts money or other perks when you meet a deposit minimum.
  • Commissions and trading fees: Most Roth IRA custodians assess a commission for each trade you make, which means you’ll lose some money whenever you buy or sell assets. However, some brokerages also offer commission-free assets, such as ETFs and mutual funds. Choosing the right broker can help you minimize or entirely avoid these fees.
  • Investor tools to help you make smart investing decisions: Although all investments carry some risk, some investment strategies are smarter than others. Many brokerage accounts offer research tools and access to live financial professionals to help you choose the best funds for your Roth IRA.

Should I get a Roth IRA or a traditional IRA?

Like everything to do with finances, it depends on your unique situation. Generally speaking, if you think you will be in a higher income tax bracket after you retire than before you retire, you’ll want to invest more in a Roth IRA, which allows you to withdraw earnings tax free. If you think you will be in a lower income tax bracket in retirement than before retirement, then you’ll want to have more invested in a traditional IRA.
Realistically, predicting your future income tax bracket can be like trying to predict the weather in Kansas City, Mo. four months from Tuesday: There are a lot of unknown factors. A hybrid approach, with money split between a Roth IRA and a traditional IRA, while also contributing to a 401(k), can be a good balance for many folks. It gets you the main benefits of a Roth IRA — tax-free growth, no required minimum distributions and more lenient early withdrawals — while also leaving open the benefits of a traditional IRA or 401(k) — an upfront tax deduction and tax-deferred growth.

What if I need to take money out of my Roth IRA?

If you watch enough heist movies you know that even best-laid schemes rarely go according to plan. Luckily, if life throws your grand financial plan off track and you need to withdraw money from your retirement savings, Roth IRAs offer flexibility. The principal — the money that you deposited into a Roth IRA account — is always yours to withdraw penalty-free. If you need to withdraw some of the interest earnings — the money earned from the principal — you will have to pay an additional 10% penalty to the IRS on earnings you withdraw before age 59 ½ or before the account is five years old. This 10% penalty is in addition to any taxes you have to pay on the withdrawal as normal income.

How long should I keep money in my Roth IRA?

As with any long-term investment, you should be comfortable salting away funds in a Roth IRA for at least five to eight years, and ideally until you are retired. Stock market fluctuations can cause investments to decline in down years, and a five-to-eight year time frame provides enough time for funds to recover in case of a drop, based on historical market cycles. If you are lucky enough to be able to retire, you’ll want to look at all of your retirement accounts and balance withdrawals from your Roth IRA with your other income strategies.

How much can I contribute to a Roth IRA?

For 2019, you can contribute up to $6,000 per year to your Roth IRA (or $7,000 if you’re 50 or older) as long as your income is not above the IRS limits. Don’t throw in the towel if your income is above the IRS cap, though. There are ways to roll money into a Roth IRA through a “backdoor IRA”, which entails opening up a Traditional IRA that you then convert to a Roth IRA.

What is a Roth 401(k)?

A Roth 401(k) is a type of retirement plan that many employers offer their workers. The main difference to a traditional 401(k) is that contributions are made using after-tax dollars, instead of pre-tax dollars. By using after-tax dollars, you can withdraw any interest earnings tax-free, come retirement time. A main benefit to Roth 401(k) accounts is that there are zero income caps, meaning that you can contribute money to a Roth 401(k) even if you make more than the income caps for a regular Roth IRA. One big difference to a Roth IRA is that you do have to start taking required minimum distributions starting at age 70 ½. Luckily, you can roll a Roth 401(k) over into a Roth IRA, which would help you avoid required minimum distributions.

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.

Jamie Cattanach
Jamie Cattanach |

Jamie Cattanach is a writer at MagnifyMoney. You can email Jamie here

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Investing

SoFi Automated Investing Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

SoFi is mostly known for student loan refinancing. However, in recent years the company has expanded its offerings to include mortgages, life insurance and now investing through SoFi Automated Investing.

Using the principles outlined in Modern Portfolio Theory, SoFi Automated Investing, formerly known as SoFi Wealth, aims to help you grow your wealth over time. SoFi Automated Investing uses ETFs to construct your portfolio based on your answers to a questionnaire. There are different strategies you can choose from and you have access to financial advisers, but ultimately, SoFi Automated Investing acts as a robo-advisor that puts together a portfolio for you based on your goals and risk tolerance.

SoFi Automated Investing
Visit SoFiSecuredon SoFi Automated Investing’s secure site
The Bottom Line: SoFi Automated Investing offers a simple way to start investing with a small amount of money to start and low fees.

  • Receive financial planning assistance free of charge
  • Special bonuses for members, including invitations to special events
  • A wide range of low-cost ETFs from 20 different asset classes

Who should consider SoFi Automated Investing?

SoFi Automated Investing is ideal for beginning investors looking to get their feet wet without the need for a large amount of money. You can open an account with a $100 one-time deposit or $20 monthly deposit. This makes it easy for newbies to begin investing.

Additionally, SoFi is especially suited for long-term investors looking to do very little of their own portfolio management.Due to broad-based ETFs that don’t rely on individual stock picking, there is very little effort required on the investors side. This makes SoFi investing ideal for financial goals such as retirement.

SoFi Automated Investing fees and features

Amount minimum to open account
  • $100 one-time deposit or $20 monthly deposit
Management fees
  • 0%
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
Portfolio
  • ETFs covering 20 asset classes
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detailSoFi does not currently offer tax loss harvesting.
Offers fractional shares
Ease of use
Mobile appiOS, Android
Customer supportPhone, Email, 4 branch locations

Strengths of SoFi Automated Investing

SoFi Automated Investing has several things going for it, making it a good choice for many investors.

  • No management fees: Right now, SoFi isn’t charging any management fees. ETF expense ratios still apply.
  • Diverse investments: SoFi investing offers a wide range of ETFs from 20 different asset classes. This makes it possible for you to enjoy diversity in your portfolio, according to your risk tolerance. You can get exposure to U.S. and international stocks, bonds and real estate with automatic rebalancing when needed.
  • Free access to financial advisers: SoFi Automated Investing offers unlimited access to financial planning professionals at no additional charge. There’s a wide range of hours available and you can meet with your adviser via chat, video or phone. SoFi’s financial advisers are fiduciaries, which means they must adhere to your best interest and they don’t make commissions based on recommendations.
  • Bonuses: Being a “member” of SoFi allows you access to some special bonuses. For example, SoFi often holds in-person events for which you can receive an invitation to join. On top of that, if you use SoFi investing, you can get a discount on your interest rates with SoFi loans. Finally, you can access career advice on top of financial planning help.

SoFi can be a great option for beginners looking to get started and who need a little help planning a goals-based roadmap.

Drawbacks of SoFi Automated Investing

No SoFi Automated Investing review is complete without offering some of the drawbacks to the product. While there are some great upsides, the reality is that SoFi is relatively new to investing and doesn’t offer some of the benefits you might see with other robo-advisors like Betterment and Wealthfront.

  • No tax-loss harvesting: SoFi investing doesn’t offer any sort of tax strategy. It doesn’t automatically harvest losses when you sell ETFs and it won’t distribute your assets across your accounts in the most advantageous way.
  • Limited types of accounts: While you can open individual and joint taxable accounts, and set up retirement accounts, there aren’t a lot of other options. You can’t open a 529 account or set up a custodial account. If you’re looking to do a little more, you may want to explore other options.

Is SoFi Automated Investing safe?

Anytime you invest, it’s important to be careful and comfortable with your strategy. You always run the risk of loss whenever you put your money into any investment account. However, SoFi investing is as safe as any other robo-advisor. The use of index ETFs means that your portfolio follows overall market trends, which, over time, tend to head higher returns (despite short-term losses).

On top of that, SoFi Automated Investing carries SIPC insurance, which protects account holders if the broker fails. However, realize that SIPC insurance doesn’t protect your portfolio from losses due to market and economic events.

Before you invest, check with resources like FINRA BrokerCheck and the Better Business Bureau to see what disclosures and complaints might be related to the company.

Final thoughts

SoFi Automated Investing is a good option for most investors looking for a simple way to manage a long-term portfolio. It’s very easy to open an account and you get free personalized financial planning help and advice to help you coordinate your portfolio to meet your financial goals.

SoFi investing is still relatively new, so you might miss out on some benefits and tools offered by those that have been in the investing space for decades. Consider your needs and compare SoFi Automated Investing with services like Betterment, Ellevest, and Wealthfront to see if it works for you.

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Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here