Charles Schwab IRA Review – 2019

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Charles Schwab is one of the main discount brokerages in the US along with Fidelity and TD Ameritrade. This firm manages corporate retirement accounts, individual retail accounts and has been referred to as a “trendsetter” in trading. It’s founder Charles Schwab, introduced the concept of a discount broker and helped streamlined trading.

Besides these benefits, Schwab offers self-directed IRA options and is a licensed bank. As a licensed bank, it offers checking, savings accounts, and lending products. It’s also renowned for its high yield checking account that is exempt from foreign transaction fees.

Who a Charles Schwab IRA is best for

Charles Schwab is best for investors that want both traditional and non-traditional assets. This option would also be optimal for investors that desire customized investment advice since Schwab has its own advisory team. It would be better for investors that want to invest in more traditional assets, as it has a limited alternative asset list. Also, Schwab doesn’t offer check writing, which could be a deal breaker for some investors.

Charles Schwab IRA investment options

Charles Schwab offers both investment management and traditional banking services. Investors can have IRAs, checking accounts and even loans under the same firm, which makes it easy to organize. This firm also has branches and phone based investment advisors that can provide customized investment advice.

One common investment that Schwab offers and made mainstream is the target date fund. Schwab Target 2030 is an example of a target date fund, which are are found in both retail and employer sponsored retirement accounts. A target date fund automatically rebalances an investor’s portfolio based on his or her retirement year. It starts out with a riskier asset allocation leaning towards stocks when the investor is younger. As the investor ages, it switches to a more conservative bond allocation to hedge against risk. The target date funds year assumes that the investor will retire around that time.

Charles Schwab IRA features

This brokerage has joined the “low or no fee” revolution and offers many commission free ETFs. These ETFs must be under the Charles Schwab brand and it charges a nominal $4.95 per standard equity trade. It’s self directed IRA also has an account minimum of $25,000 and many funds even those without trading fees have expense ratios ranging from 0.1-1.5%.

Customer support

Since Charles Schwab is one of the biggest brokerages, it has excellent customer support. It provides online portals, educational resources, in person and phone based support. One of the biggest advantages Schwab has over other firms is a large trained employee population.

Pros

  • Affordable trades.
  • Wide variety of services, including banking and lending products.
  • Excellent Service and investing resources.
  • Commission Free Funds.

Cons

  • Lacks the non traditional options other providers have. For example, it doesn’t offer investing in real property, precious metals and other esoteric investments.
  • Fees can compound over time. While it has commission free funds, trading costs and expense ratios can erode returns over time. Therefore, it makes sense to always check an investment’s fees and minimums.
  • High minimums. Charles Schwab has no minimum balances for standard retail accounts like IRAs and Roth IRAs. However, it does require a minimum deposit of $25,000 for self directed IRAs and day trading accounts.

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