Every week I get at least one email from a reader asking me which broker is the “best” for their Roth IRA. The number of emails jumps exponentially after the new year and, fortunately, falls after April 15th! You have until April 15th, 2011 to decide if and how much you will contribute to your Roth IRA for 2010. If this is the first year you’re contributing to a Roth IRA, you’ll also have to pick who you want to watch over your money.
Before you decide where to put your money, you really need to decide what you want to invest in. If you want to invest it in mutual funds, you’ll be best served going with the company that runs the funds you like. The two big names in the mutual fund space are Fidelity and Vanguard. If you really like their funds, I recommend you open a mutual fund account directly with them because you will be able to buy and sell shares for free.
If individual stocks are more your thing, then you’ll want to pick a broker that offers services you like at a cost that’s affordable. Discount brokers are all the rage these days, with sub-$5 stock commissions and all the research you could ever want. My personal opinion is that as long as you can satisfy the minimum balance requirements and the fees aren’t expensive, the broker is less important. I personally like TradeKing because their customer service has been rated one of the best and I’ve never had issues with it myself (I use their online chat feature all the time). They aren’t necessarily the cheapest anymore, there are a few even cheaper, but there’s a bit of an inertia effect there (I have my stocks there and I don’t trade much, so I don’t want to go through the process of moving them).
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