- 16 Feb 2023
- Bonds
- Precious Metals
- Comments: 0
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You might be wondering about the merits of investing with Edward Jones. This investment company is so large that most people in the US have heard of it, even if they've never opened an account. But what exactly does Edward Jones offer? What are their rates like? And what do you need to know before you make a decision?
We've broken down the current rates for their different available investments. We've also taken a look at a few alternative companies that may offer assets that Edward Jones doesn't.
About Edward Jones
Edward Jones is one of the largest investment institutions in the United States, having been in operation for over a century. Their main goal is to help individuals with their investments, rather than to work with huge corporations. Since the company is privately owned, they don't have to worry about shareholder obligations above the interests of their investors.
There are more than seven million people who invest with Edward Jones. When you open an account, you're given ongoing customer service, including financial reports. You will also have the opportunity to connect to a financial advisor and ask questions about how best to plan for your future.
Edward Jones has multiple assets available for purchase through their network. They offer a great deal of transparency about the risk level of each asset, as well as the potential rewards. Rates are expressed as a percentage over time, often as a percentage over one year.
Edward Jones IRA Options
Edward Jones offers several different types of retirement account, as well as different investor accounts for your cash savings. The right retirement account for you will depend on factors like your age, plans for long term growth, and employment. You can talk to a financial advisor about the differences if you're feeling lost.
Some of their options are 401(k) rollovers. You can take part of or all of the funds from your employer 401(k) and move them into a new IRA instead. An IRA is an individual retirement account that is not subject to the same rules and regulations as your employer plan.
You can get a traditional IRA through Edward Jones. With a traditional IRA, you don't pay any taxes on your contributions. That way, you can invest a maximum into your account, so that you have more room for growth. You will only pay taxes when you begin to take distributions.
Another option is to use a Roth IRA, also available through Edward Jones. A Roth IRA has the same basic setup and investment opportunities as a traditional account. But you pay your taxes when you make your contributions. Then when the time comes to take money out of the account, you don't have to pay any taxes on your distributions.
The right choice really just depends on your investment style and long term plans. Some people prefer to maximize their growth, while others prefer to minimize their overall tax burden by paying taxes right away. If you do that, you don't have to pay extra taxes on your increased holdings later.
In addition to IRAs, Edward Jones has 403(b) and 457 retirement plans available. The former plans are available to non-profit employees alone, while the latter are available to people employed by their state or local government.
There are some limitations when it comes to the offered retirement plans, though. For example, Edward Jones does not offer any self-directed IRA options. Self-directed IRAs can hold different assets and have more freedom in terms of how you spend your money.
Edward Jones IRA Rates
The rates for an Edward Jones IRA vary by the asset and are listed transparently on the website. If you want to find out how much you'll be paying in interest, that information is very easy to access. You are also allowed to find a financial advisor through the Edward Jones website.
Rates change from week to week, so it's important to check the website to make sure that the information is still accurate. We've broken down the rates as of the time of writing this article.
Certificates of Deposit
Certificates of deposit are available in a range of time periods. The rate is calculated based on the amount of time that you plan to hold the certificate. Currently, the longest option appears to be a five year plan, without any rates listed for seven or ten year choices. The shortest term, on the other hand, is three months.
Certificates of deposit earn interest over fixed periods on a lump sum of cash. While these may sound like savings accounts, there is one key difference: you cannot touch the money at all during the agreed-upon time period. If you do, you can lose some of the interest or have to pay penalties. In exchange for this, the average certificate has a better interest rate than you'll find with a savings account.
All of the interest rates for Edward Jones certificates of deposit are more than 4%, except for the five-year certificate, which is 3.8%. The highest percentage is a one-year certificate, which has a 4.7% interest rate. The other rates are:
The Edward Jones website does not list any rates for four year, seven year, or ten year certificates. It is likely that there are no certificates for these time frames offered by the institution.
All of the interest rates are calculated as an annual percentage yield. Because interest is paid on an APY basis, you cannot keep the interest earnings in the same account as the certificate. You need to have regular payouts of the interest instead.
Each of the certificates of deposit offered are bank-issued and can be insured for up to $250,000.
Treasury Bonds, Bills, and Notes
Another asset that you can purchase is a treasury bond, bill, or note. All of these investments are fully exempt from your typical state income taxes and are backed to your payment of the principal amount and the interest in the agreed upon time frame.
The rates for these assets are expressed as a percentage of the yield to maturity. You are expected to allow the assets to mature prior to selling them. If you sell the assets before they have fully matured, then you will not receive the projected value. In fact, you may receive significantly less than you initially paid.
The available time periods last from three months to thirty years, which is a staggering spread. Currently, the yield to maturity percentages are:
The right investment amount and time period will depend on your investor goals and needs. For this reason, Edward Jones recommends that you speak to one of their financial advisors about the available options before choosing one.
Enterprise Notes
Edward Jones offers enterprise notes that have been sponsored by the government. But the notes are not guaranteed, and if the issuer fails to follow through, the US government is not responsible for paying back the debt. In addition to this, they do not have FDIC insurance. So they're a somewhat riskier investment.
There are three issuing authorities of these notes: the Tennessee Valley Authority, Fannie Mae, and Freddie Mac. The Edward Jones website states that the YTM percentage ranges from 3.41% to 4.8%, but there aren't specific options listed. To find out more about the available offers, you'll need to call and speak to somebody.
Corporate Bonds
Edward Jones offers investment grade corporate bonds. These bonds have been rated anywhere from AAA to BBB in terms of quality. If the bonds are insured, there isn't any representation given as to whether the insurer can follow through on their commitments.
There are multiple different corporate bonds available, though the website does not list individual options in detail. It just says that the YTM percentage for these bonds ranges from 3.27% to 5.2%.
Personal Credit Line
As of December 15, 2022, Edward Jones has begun offering personal lines of credit to certain customers with certain accounts. The interest rates are subject to change due to variability. Edward Jones bases their interest around whatever's higher: the current primary rate or a base of 4%.
This is a margin loan that only some customers can use. The company emphasizes that margin loans are risky and should not be undertaken by every customer. It's possible to lose all of the funds in the account. If you have securities in the account that decline in value, you may need to pay back the loan with other parts of your portfolio.
If this account undergoes a margin call, Edward Jones retains the right to liquidate your assets without any notice. You also don't have any say over which assets are liquidated in order to meet your obligations. The firm has the right to increase their margin requirements or refrain from extending the time to meet a margin call.
The interest rates for the personal line of credit are grouped by the price. Accounts range from loans of less than $100,000 to loans of more than $10,000,000.
The percentage rate for small accounts is highest, while the lowest rate applies to accounts with more than ten million borrowed. These are the current going rates:
These assets will be placed under care and invested into different areas in order to yield income.
Tax-Exempt Bonds
There are some tax-exempt bonds available for purchase through Edward Jones. You do not need to pay federal income taxes on these bonds. But with that said, you might need to pay local and state taxes on them. It all depends on your location and the unique laws surrounding your local taxes.
There are three bond ratings: AAA, AA, and A. Edward Jones does not list any ratings for the AA bonds, so it's possible that there are none available to purchase through their platform.
With the AAA bonds, the current YTM rate is 1.33% to 3.83%. With the A bonds, the current rate is 1.61% to 4.12%.
The consumer price index for Edward Jones is 6.5% and the prime rate is 7.5%, as of December of 2022.
Insured Bank Deposits
There are insured bank deposits available for purchase, once again with tiers grouped by pricing. The lowest tier is anything below $250,000, which has an interest rate of 0.85%. The highest tier is anything about $10,000,000, which has an interest rate of 2.6%.
Between them are accounts of up to $500,000 at 1.55%, up to $1,000,000 at 1.55%, and up to $10,000,000 at 2.1%. All of these interest rates are subject to change, similar to the other investment offerings available. The company website has a full disclosure that explains the risks and how the interest rates are calculated.
Uninvested Cash Balances
If you have an account with Edward Jones, you might have cash savings that haven't been invested into anything yet. Cash is kept as a type of free credit balance, and the interest is considered a liability of the company. If you want your interest, you can ask for it to be paid on demand.
Uninvested cash is considered to be waiting to be invested, rather than being a specific savings account. Edward Jones does not encourage holding onto uninvested cash to try to earn interest. The rates of interest are calculated by Edward Jones, and the interest is paid on a monthly basis.
Accounts are divided into retirement and non-retirement types. As of writing, both account types have the same interest rate of 0.9%. You can earn significantly higher returns by investing the cash into one of Edward Jones's other offerings instead.
Money Market Fund
Edward Jones has a special money market fund that is only available for certain accounts made prior to 2019, plus some new accounts including advisory solutions accounts, pooled retirement accounts, and guided solutions portfolios.
The money market fund is a risky investment, and Edward Jones emphasizes that you might lose your investment. They say that you should carefully weigh all of the risks and objectives before making a decision. There is an effort to preserve at least some of the value of your initial investment, but there's no guarantee that you will make money.
The fund doesn't have federal insurance or any official backing. The performances quoted on the website are calculated based on the returns of the fund in past earnings periods. They don't guarantee that your returns will match the website.
The current seven day yield for investment shares is 3.57%, while the yield for retirement shares is 3.58%. One fund uses your personal savings, while the other uses your retirement contributions. The yield of both funds is nearly identical currently, but it could change in the future.
Can I Put Gold in an Edward Jones IRA?
Gold has been classified as an alternative asset by the IRS, along with investments like real estate and cryptocurrency. Since the Taxpayer Relief Act was passed in the 90's, it has been legal to hold certain types of gold in a retirement account.
However, traditional IRAs cannot hold physical precious metals. You need a self-directed IRA for that. Edward Jones does not offer self-directed IRA plans, nor do they sell any alternative assets. You would need to use a self-directed IRA custodian that can record and maintain your account.
It's vital that you work with a licensed and knowledgeable custodian. That way, they can make sure that you're properly complying with the IRS rules on how your account is managed. You'll need to invest in products of a certain purity level, and you'll need to store them in a special facility. The tax paperwork will be taken care of by your custodian.
There are multiple reasons that people might want to invest in physical gold. The top two are hedging against inflation, and hedging against stock market downturns. Many experienced investors say that investing in gold is a vital way to balance a portfolio, especially in these uncertain times. You just can't do that through Edward Jones.
Other Options for a Gold IRA
If you do want to invest in a gold IRA, then you should look for companies that specialize in this. There are certain gold dealerships with entire teams of staff that can help you with your paperwork. They typically have custodian and depository partners as well, so you're easily put in touch with everyone you need for your account.
All three of our top recommendations sell a number of different IRA-approved products. They will also all help you to create a self-directed IRA, fund it, and choose the products that are right for you.
#1. Goldco
Goldco asks that you invest a minimum of $25,000 into their products if you use their IRA services. As long as you can meet that threshold, they have incredible customer service. They'll even go as far as talking to your custodian for you and coordinating the entire account rollover on your behalf, saving you tons of time and hassle.
Augusta Precious Metals has the highest buy-in of our recommendations, with a minimum investment of $50,000 to start. But once you do that, you'll have access to boutique-style services and dedicated account management.
You can access reports about your holdings online instantly, plus ask your representative any questions you have. There are even free webinars run by the company's executives, even before you commit to being a customer.
American Hartford Gold is considered the most affordable and accessible option on the market. They don't have an investment minimum, and they don't charge extra fees, so they're a great pick if you can't afford either of the other two options.
Customers consistently give them excellent reviews. While many of AHG's customers found them through television advertising campaigns, a lot of the customers are also referred by word of mouth as well. AHG keeps their overhead costs low and transfers the savings on to their customers, offering low prices and frequent new customer deals.
Final Thoughts
Edward Jones is among the most popular financial institutions in the US, with more than seven million individual people trusting them with their retirement accounts. It's true that Edward Jones has many different assets available for purchase, most of which show consistent returns over time despite the risks.
There is also an ideal level of transparency on the Edward Jones website. They explain exactly how they calculate their varying interest rates, how their yield periods are calculated, and what the risks are of each investment. You can find information about whether investments are insured, whether they're high risk, and whether they're available to all customers.
However, Edward Jones is not a good choice if you want to invest in alternative assets like gold with your IRA. You need a self-directed IRA to do that, and Edward Jones doesn't offer any of these accounts. You're better off working with a gold IRA company like Goldco and their associated custodians.
