Investing in your future can be overwhelming, especially if you don't know much about the process. Many people have individual retirement accounts in order to grow their savings prior to retirement. But there are many ways to diversify these portfolios, and the right setup for you will depend on your needs and goals.
You might be wondering whether you should open an IRA with Charles Schwab. While Charles Schwab is one of the most recognizable names in the investment industry, many people don't know exactly what this company offers or what it does. So what services does Charles Schwab provide? And are they actually the best choice when it comes to opening an IRA?
We've broken down the most important information for you, along with the bottom line.
About Charles Schwab
Charles Schwab is a corporation in the US that helps people with growing and managing their wealth. They are an investment firm with a huge range of different products and types of account. In addition to the assets and products themselves, Charles Schwab employs a number of financial advisors and investment professionals who can help with planning for your future.
Charles Schwab was created over 45 years ago, when the company's founder committed to helping individual investors achieve their goals. The company has continued to work with individuals on helping with life planning and investing since then.
There are many tools available online for Charles Schwab clients to plan their futures. Among these are retirement planning calculators, market insights, investment ideas, commentary on current events, and ongoing account management. Each customer is given a total satisfaction guarantee, with your commission price being refunded if you aren't satisfied.
Many people are also attracted to Charles Schwab because of the company's low barrier for entry. An account can be opened without meeting any minimum balance. Then you can get a $0 fee on the equity trade commissions that are listed online. Other commissions vary depending on the product and the amount of the investment.
Clients of Charles Schwab
Charles Schwab operates differently from many of the largest investment institutions by focusing mainly on individuals. The majority of their clients are individual investors who want to plan for their individual futures.
According to the company website, these individuals are driven and motivated people who care about their futures. They want to use investments to shape and control their future options.
Charles Schwab also works with financial advisors. These are independent entities who are registered as official advisors. Advisors working with the company all adhere to the same values regarding the treatment of individual investors.
A small percentage of Charles Schwab's customers are employers and their companies. These companies are typically looking for group plans to help serve their individual employees. The goal is to optimize the benefits that the employees receive so that they can have a secure retirement fund that's compliant with all relevant government regulations.
Charles Schwab IRA Options
An individual retirement account has vital tax benefits that can help you save for the future. Charles Schwab has multiple different IRA options available to the average investor. You can open an IRA even if you already have another retirement account. In fact, you can move funds from your existing retirement account into the new one as well.
Traditional IRAs have the traditional retirement account setup. This means that instead of paying taxes on the money that you contribute, you pay taxes on the money that you take out of the account later. By doing this, you maximize the potential for growth and don't need to worry about taxes until you're retired.
Some of the contributions might be tax-deductible each year. There are limits on how much you can contribute to a traditional IRA from your own savings. An account can be opened regardless of your personal income levels. This is one of the simplest retirement accounts to set up and maintain.
With a Roth IRA, you have access to all of the same investment products that you get with a traditional IRA. You can purchase traditional assets like bonds, stocks, exchange traded funds, and mutual funds. The difference is in when you pay your taxes.
You'll pay taxes on your Roth IRA as soon as you make your contribution. Then you won't have any tax obligations when you take your distributions in retirement. That allows you to maximize your distributions and to avoid paying taxes on the account's growth.
Keep in mind, though, that these contributions will not be tax deductible. In addition, when it comes to the Charles Schwab services, there are limitations based on your income level.
A rollover IRA is a traditional IRA that is funded from a different retirement account of yours. The other funding option is to make a contribution from your savings, but as mentioned, there are limits on how much you can contribute in a year.
Some people choose to roll over the funds from a 401(k) employer plan into an IRA. Depending on your current retirement plan, this sometimes gives you access to more asset options, so you can create a more diversified portfolio. The fees also tend to be lower than with a 401(k), especially when you use Charles Schwab's services.
A rollover can be completed between the accounts without any penalties, as long as you do it in the first 60 days after opening the IRA. After that, any transfers of funds will be considered an early withdrawal. So you'll have to pay taxes along with a hefty withdrawal penalty.
Charles Schwab has services specifically for people who inherit an IRA from someone who has passed away. Rather than setting up this account, you simply come into the savings when your spouse or another beneficiary has passed on. The legal framework surrounding this process can be confusing.
You can't convert an inherited IRA into a different account, nor can you make any tax deductible contributions. You will be required to either liquidate the account or take annual distributions within a particular time period. You can talk to a financial advisor about your obligations and the regulations, so that you can make a plan to maximize the benefit of the account.
Custodial IRAs are another complicated type of retirement account that can be either Roth or traditional options. These accounts are created exclusively for children below the age of 18 who have an active earned income from their job. While the funds typically go toward retirement, they can also be used to pay for future needs such as college.
Another person is typically in financial control of the custodial IRA until the child turns 18. If you are the child's guardian, you can talk with someone at Charles Schwab about the retirement account options. You might also discuss whether you want a traditional IRA, or whether you'd rather put the money into a different type of savings account that's more easily accessed.
Your child may also have input regarding this decision. You can have them participate in the discussion with you. This will help teach them a lot about future planning and about how to navigate the complex world of investment accounts in their adult life.
Charles Schwab notes that they have customized solutions ready for small business owners who need to provide retirement accounts to their employees. You can also create a retirement account for yourself even if you have a sole proprietorship. Different options are available for businesses of different sizes, including IRAs and 401(k)s.
There are multiple different features that you can look for in these accounts. Some of the accounts offer plan customization, for example. Others have high contribution limits, so people can put a larger amount of their paycheck into the savings.
Charles Schwab IRA Products
Charles Schwab has a significant number of different products available for purchase. These are traditional assets that can be held in a traditional IRA or 401(k). But there are many options showcased through their network, and you can create an incredibly diverse portfolio. Many people manage their money exclusively with Charles Schwab for this reason.
Many mutual funds are available to purchase with a Schwab account. You can go about doing this in a few ways.
One of the options is to look for mutual funds by yourself. There is a robust search tool that you can use to filter different funds and look for what you want. You can divide them by category, ratings, fees, and other criteria.
Another option is to build a full portfolio by using Schwab's tools and insight analytics to determine which choices make the best options.
You can also decide to have a mutual fund portfolio that is professionally managed. Your investment manager will gear your portfolio toward specific goals such as your desired monthly retirement income, the approximate date of your retirement, and the amount you need to have saved by the time you reach retirement.
Exchange Traded Funds
You have the option to invest in exchange traded funds, which are funds backed up by physical holdings. For example, the funds in an ETF might be invested in stocks, bonds, or other major investments. Charles Schwab encourages people to use ETFs as a foundational asset in their portfolios.
There are over 25 ETFs available for a low cost through the Schwab network. If you broaden your horizons, you can choose from a total of over 2,000 ETFs across multiple different industries and types of assets.
It also costs $0 per ETF trade in fees with Charles Schwab. Other companies typically have trade fees.
Money Market Funds
The money market funds are cash funds that are meant to be easily liquidated and stable, while having a higher interest rate than typical savings accounts. You can use them to generate passive income through their interest.
Charles Schwab gives you the option of investing in a number of both tax-free and taxable funds. Like with the ETFs, there aren't any transaction fees with purchases or sales. Depending on the fund, the minimum investment might be just $0.
Stocks make up a huge portion of almost every investment portfolio, since they are one of the main ways to generate income. However, they are also a high risk investment, as they become worthless if the company goes bankrupt.
You can trade stocks on Charles Schwab's platform without any commission fees. It costs $0 to buy and sell shares, as Charles Schwab wants to make sure that any individual can access the investment process.
Stock options include US stocks listed on the New York Stock Exchange, international stocks from more than 30 countries listed on over 50 other stock exchanges, and fractional shares of companies. With fractional shares, you pay an amount like $5 to own just a tiny portion of one company's shares and profits.
Bonds and Fixed Income
You can invest in fixed income products as well. With these products, you put a certain amount of money into the account. You receive a fixed interest rate over an agreed-upon amount of time. There's very little risk involved, and many of these options are fully federally insured.
Fixed income investments and bonds are a way to diversify your portfolio while providing guaranteed passive income. They are often used to stabilize your holdings and to help meet certain fixed income goals.
You can trade a huge number of different futures contracts by betting on what the market will do in the future. Charles Schwab gives you access to their analytics and research to help you determine the best picks for your goals. There are even specialized platforms and tools revolving exclusively around futures.
There's a flat fee of $2.25 for every futures contract, along with a total satisfaction guarantee. Whether you're buying the contract online or through a certified broker, the fee remains the same. So you can take advantage of the entire futures catalog without incurring any extra fees.
Margin loans are available to some customers. With these loans, you're given a line of credit that is secured against your current account's holdings.
People typically use margin loans to buy more securities and improve their investing power. In addition, margin loans can be a super helpful resource if you have other needs to meet in the short term.
Can You Buy Gold with a Charles Schwab IRA?
It is not possible to buy physical gold products with any of Charles Schwab's retirement solutions. They don't offer a self-directed IRA, which is the only kind that can hold gold. Similarly, you also can't purchase physical silver, palladium, or platinum.
Charles Schwab may offer some investment products that allow you to invest in the idea of gold. For example, some mutual funds might invest in mining companies or refineries, so you're benefiting from the precious metals industry. There are some exchange traded funds that are backed fully by gold, but you're buying a piece of paper rather than the gold itself.
If you do want to buy physical gold for your retirement account, you need to work with a different company. Most self-directed IRA custodians will manage your assets, but they don't offer gold products themselves. It's easiest to find a company that sells gold IRA products, connect to a custodian, and coordinate things between them.
Alternatives for a Gold IRA
If you want to buy gold for an IRA, these are our top three companies to work with. Each of these dealerships has an incredible reputation and a solid network of partners. They can connect you directly to a custodian and to your choice of depository. Their employees work one-on-one with you to evaluate your goals and find the account solution that's best for your unique circumstances.
Goldco is an all-around great choice if you have at least $25,000 to spend on gold. They specialize exclusively in gold IRAs and give you one dedicated employee to handle the process. You can ask all of your questions prior to ever making a commitment. In addition, they have been endorsed by Sean Hannity and other commentators.
Goldco consistently scores top marks with consumer watchdogs like the BBB and the BCA. They have received thousands of positive reviews from past customers. In the rare events that there are negative reviews, the company addresses and rectifies the issues immediately.
There are some non-IRA products available for purchase from Goldco as well. Many of these are exclusive collectible offerings that you can't find in other stores. While there's no guarantee that their value will increase, they do have a greater potential for growth than typical IRA products. But they can't be stored in an IRA.
Augusta Precious Metals has the best reputation in the business. In fact, they have never had a single official complaint filed through the BBB, even though they serve thousands of customers. There's a dedicated customer service line that people can use if they're at all unsatisfied with their accounts.
Working with Augusta allows you to access a lifetime of free client services. However, you do need to have a minimum of $50,000. This is the highest buy-in on our list, but it's actually not the highest in the industry. They just require that you meet this minimum so that they know you're serious about investing.
Augusta is endorsed by Joe Montana, who has dedicated his time and energy to being a celebrity ambassador for the company. He says that he was so impressed by their educational tools and executive leadership that he wanted to make sure all of his friends and family worked with them.
American Hartford Gold doesn't have any minimum requirements at all. You can buy gold and silver for as much or as little as you want. That makes it a great choice for newer investors and people who are working on a shoestring budget.
In addition, AHG often runs promotions for new investors. If you invest a certain amount, you might have your storage and custodian fees waived for multiple years.
It's also possible to get back part of the value of your investment in free silver, which is shipped directly to your door. Since it's not lumped in with your retirement account, you can either keep it or liquidate it right away.
Charles Schwab is a well-established institution that helps individuals invest in their future. They have personal investment accounts and retirement accounts available. In addition, they create customized retirement plans for the employees of small businesses, with various options available depending on the size of the company.
When compared to other investment companies, Charles Schwab is often praised for having so many options. There are tons of different assets that you can invest in, with a much wider network than you'll find with many competitors. You can also use free online tools like retirement planning calculators to prepare for your future.
But there are limitations to what Charles Schwab offers. They don't have any self-directed IRA plans, nor do they offer any alternative assets. Some people want to invest in physical gold as a hedge against economic volatility. You won't be able to do that using a Charles Schwab account.
So if you're looking to purchase physical gold and store it in a secure depository, you should work with a dealership like Goldco or Augusta Precious Metals instead. They'll connect you to both a custodian and to several different storage options.