A broker is more than just a place to open an IRA to save for retirement. From pricing to investment selection, where you open an IRA definitely matters, but comparing their differences can be a headache.
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We tend to think investors can make better decisions by focusing on the big things — commissions, investment choices, research, and more — when picking a broker. Let’s take a look at how Capital One and Fidelity compare for the long-term retirement investor.
Putting commission prices in focus
Of all the things to know before you open an account, what you’ll pay your broker should be top of the list. Pricing differences add up to just one dollar on most trades.
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Brokerage
Stocks and ETFs
Stock Options
Mutual Funds
Capital One
$6.95 per trade
$6.95 + $0.75 per contract
$19.95 per purchase
Fidelity
$7.95 per trade
$7.95 + $0.75 per contract
$49.95 per purchase
Data source: company websites.
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Savvy investors can do better than standard prices. Capital One’s ShareBuilder service makes it possible to place trades that are not time-sensitive for just $3.95 each. In addition, both brokers waive transaction fees on some funds, which can bring your trading costs all the way to zero.
Those who shop around can collect some of the biggest savings of them all. Brokers routinely offer thousands of dollars in commission-free trades and cash bonuses to people who open a new account. Learn more about special offers for IRAs.
Mutual fund selection and commission-free choices
It can be a good thing to have more choices. Mutual fund availability varies by broker, and some brokers offer funds that are free for their clients to trade. Here’s how Capital One and Fidelity compare on funds.
Brokerage
Total Mutual Funds
No-Load, No-Transaction-Fee Funds (NTF)
Commission-Free ETFs
Capital One
More than 1,100
More than 400
None
Fidelity
More than 11,500
More than 3,600
91 (Fidelity and iShares)
Data source: company websites.
The differences are stark here, as Fidelity offers significantly more funds, including fee-free mutual funds and ETFs. Of course, what really matters isn’t how many a brokerage offers, but whether or not it has the funds you want to invest in.
Minimum deposit requirement for IRAs
We have good news: How much you have to invest won’t prohibit you from opening an account. Capital One and Fidelity are no-minimum brokers that do not require a minimum deposit in order to open an account. That said, making a larger deposit may qualify you for special offers when you open your IRA.
You can start small with an IRA from Fidelity or Capital One. Image source: Getty Images.
International stocks and ADR investments
Exotic locations aren’t just for your future retirement home. Online brokers have made it easier to invest around the world, but not all offer the same access to investing in foreign companies. Here’s how Capital One and Fidelity compare for investing in international companies.
Type of Investment
Capital One
Fidelity
American depositary receipts(ADRs)
Yes
Yes
Stocks traded on international stock markets
No
Yes (25 markets)
Mutual funds and ETFs of foreign stocks
Yes
Yes
Data source: company websites.
The primary difference between these brokers is the level of access you’ll have to place trades directly on international exchanges. If you prefer to take your portfolio international via local ADRs, mutual funds, or ETFs, though, the brokerage you choose shouldn’t hamper your ability to go global.
Mobile app
Mobile apps for phones and tablets enable you to trade from anywhere you have an internet connection. Here’s how each brokers’ users and customers rated their mobile apps (as of 1/24/2017).
Brokerage
Apple App Store
Google Play
Capital One
3.0 stars
3.0 stars
Fidelity
2.0 stars
4.0 stars
Data source: relevant app stores.
IRA fees: maintenance and inactivity fees
Although fees are slowly disappearing, some brokers charge maintenance fees for keeping your account open, and inactivity fees for investors who don’t make a minimum number of trades. Luckily, Capital One and Fidelity both boast no-fee IRAs, so you won’t have to worry about recurring fees taking a chunk out of your savings every month or year.
Research and retirement planning tools
IRAs are all about going alone, but we tend to think that having access to research and retirement tools can help individual investors make more-informed decisions about their investments.
Fidelity and Capital One both have plenty to offer. Fidelity provides analyst upgrades and downgrades for individual stocks, research from S&P, and a number of complex screening tools to its clients. Its Income Strategy Evaluator can be helpful for savers who want to calculate their expected retirement income, and learn how to generate more from their savings.
Capital One has a back-end built on Morningstar data, which makes it easy to view and compare financials and performance data for stocks and funds alike. Its Fund Evaluator tool comes in handy for finding cost-effective funds for your portfolio, and it’ll even help you screen for no-transaction-fee funds, too.
Best pick for IRAs: Capital One vs. Fidelity
The honest truth is that no one broker is perfect for everyone; it all depends on how each brokers’ pros and cons fit into the specifics of your portfolio. Capital One takes the cake for having lower commissions, especially for those who use its low-cost ShareBuilder service. That said, Fidelity dominates in fund selection and international investment choices. To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that is a good fit for you. Check outFool.com’s IRA Centerto compare major brokerages on commissions, account minimums, and special offers.
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