Submitted by autoHQ t3_z8ezmx in personalfinance
Is Chase bank a decent broker to set up a Roth IRA? I bank with them, so I'm thinking it would just be convenient to have my Roth set up with them as well.
Any cons to doing it like this? Are there better easier brokers to set up a Roth with? I'm planning on maxing out my contributions each year and just buying SPY or something.
Funny story. driving home MLK weekend this year, and I've been exchanging emails with my FIL. He thinks 401k's are awesome and IRAs suck.
It turns out he had a 401k invested in an S&P 500 index fund through his former employer. (He's retired). IRA? At a bank. In CDs.
S&P 500 index fund over the long haul (which he was) will always beat CDs.
Before dissing an IRA at a bank, I did a quick look. It turns out Chase offers investing through JP Morgan wealth advisors. So if they shuffle you to JP Morgan, it might be fine. If it's in CDs? It really sucks.
Here's what I want you to do:
(Basically I'm asking you to do the same thing retroPencil abbreviated...and fees are sometimes not obvious.)
What kind of fees are there since this would be a self managed account? I thought most brokers have gone to commission free trades?
the investments themselves are not fee free. Well, maybe if you buy straight stock they are. It would not surprise me to find out that the S&P 500 index fund JP Morgan would let you have would have more in internal fees than Vanguard or Schwab or Fidelity.
By the way, it may not be any easier to use Chase for investing... I have two different websites for Fidelity: one is my college savings account (529s) and the other is the 401k plan my employer provides. They're linked - I can log in to one and move back and forth between the two, but the UIs are very different, having different looks and feels.
You can buy Blackrock/Fidelity/Schwab/Vanguard mutual funds and ETFs in a JPMC do-it-yourself account with no commissions or AUM fees.
Interesting. I had thought that a roth IRA was identical to a regular investment account, just a limit on yearly contributions, and no tax if withdrawn after a certain age. Didn't know there were fees on top of it. I've bought and sold SPY stock on my regular trading account, but I haven't noticed any fees with it.
JP Morgan has a self directed Ira account. You set it up online and all stock/etf trades are free. I have my Roth with them and I can fund directly from my checking. It’s nice having it all at one place.
Is your regular trading account hrough Chase/JP Morgan?
I don't know who charges fees and who doesn't. JP Morgan might.
Here is the JPMorgan Equity Index Fund, which is designed to track the S&P 500.
Go down the page a bit, and you'll see (under the "Fees" subheading): "Gross expenses" and "Net expenses".
The net expenses are key... this fund's net expense ratio is 0.45%. What does that mean?:
>Expense ratios are typically represented as a percentage. An expense ratio of 0.2%, for example, means that for every $1,000 you invest in a fund, you’ll be paying $2 annually in operating expenses. These funds are taken out of your expenses over time, so you won’t be able to avoid paying them. Just as your returns are magnified because of compound interest, your expenses are as well, which is why there may be a big difference in earnings if you choose to invest in a fund with a high expense ratio.
By contrast, Vanguard's S&P 500 index fund has an expense ratio of: 0.03%.
That is what people mean when they talk about index funds with low expenses. Fidelity even has some funds without any fees at all.
So what happens if I just put money into my Roth IRA and invest it all in SPY? Does that have any annual fees? I don't have to go with their in house S&P index fund, do I?
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Watch out for the term "Self-directed" IRA. That refers to a specific type of IRA that you can use to buy real estate, rental properties, and privately owned company stock. Very few places offer them and tend to have very high fees. I think you're referring to an IRA that you set up yourself and is not done through a 'robo-advisor."
retroPencil t1_iybaymk wrote
Compare their fee schedule to Fidelity, Vanguard, Schwab, etc.