What Brokerages offer Commission-Free IRA's?
There’s only a couple truly fee-free commission-free trustworthy brokerages that offer retirement accounts out there, and these have no hidden fees whatsoever like many of the larger brokerages have.
I personally use one of these brokers (M1 Finance) for all of my long-term saving & investing accounts. The other (SoFi Invest) is the next best option in my opinion, as while they do pretty much exactly what M1 Finance does they have a slight element of risk compared to M1 Finance in my opinion.
To be very clear in what I mean is these brokerages don’t charge a monthly fee or a percentage of your net-assets in your account, nor do they restrict you to only trading certain ETF’s commission-free. These brokerages allow you to trade nearly everything, including individual stocks, commission-free. They have traditional investment accounts as well as roth IRA and traditional IRA accounts.
The Broker I use & Recommend: M1 Finance.
Not only does M1 Finance offer commission-free trades, but they also offer free managed portfolios and target-date portfolios. The only downside is those have ETF-fees, however this is where M1 Finance really shines: You can mirror the portfolio of ETF’s or Index’s such as the Dow Jones Industrial Average (Ticker $DJI) and pay zero ETF-fees as well, due to how M1 Finance’s platform works.
Other than that M1 Finance also offers automatic rebalancing if you choose to use it, and access to pretty much all stocks and ETF’s with the exception of some penny stocks. To be honest though, with the exception of a couple minor things like being able to auto-rebalance your portfolio and mirror index’s to save on ETF fees, Sofi Invest has pretty much all the features of M1 Finance.
So why do I recommend M1 Finance over Sofi Invest?
There are a few reasons, one being I really like the ability to just mirror ETF’s and index’s, but more than that it’s that M1 Finance doesn’t have exposure to Personal loans, student loans, and other potentially problematic departments that could cause them to go out of business in the event of a recession. That wouldn’t necessarily cause you to lose your money, as they have Government-backed insurance, however it’s a hassle to deal with if it did happen.
Other than that there are little things, such as Sofi Invest not offering low-cost margin rates that can be useful in certain circumstances, or the interface of both of the platforms. While I have a Sofi Account and I used them for awhile, I greatly prefer M1 Finance’s interface both on mobile as well (especially) on computers. It’s much cleaner, has better visualization, and it’s easier to manage and use in my opinion.
There’s some more little things, like SoFi pushing high amounts of bonds, which in my opinion is a bad decision, and their account opening process is more cumbersome and they often want you to speak to someone, where they try to get your to let them manage your money (for “free”), versus M1 Finance’s easy 5minute signup process that doesn’t require talking to a person unless you actually want to.
Anything Else I should be aware of?
M1 Finance trades during the morning, Sofi invest trades during the evening, which may not sound like an issue, however statistically if you buy later in the day you generally pay a slightly higher price compared to the morning, so in the long-run you may get better value using M1 Finance due to that, but truthfully it can swing either way.
If you aren’t familiar with how these platforms work, they both allow for fractional share purchasing so they only execute trades during a certain period of time every single day. M1 Finance is morning by default, but has a second trading window in the evening, while sofi only has the trading window later in the day.
You can sign up for M1 Finance by clicking here; after the initial signup process it’ll prompt you asking what type of account you’d like, which could be either a traditional account, a roth IRA, a traditional IRA, a SEP IRA, and a few other specific accounts that aren’t relevant to 99%+ of people. If you open an account through this promo link you can get between $10 and $25 after depositing over $100.
The Only other broker I'd use for an IRA: Sofi Invest
If you read all the above you might wonder why I even include Sofi, as it’s pretty clear M1 Finance is better from what I outlined above.
The reason is simple: They also offer commission-free IRA accounts.
I’m not trying to discriminate and push you into the platform I prefer, I’m just giving you the options out there, and this is the only other trustworthy broker that is commission-free.
Due to the fact that Sofi Invest simply has the features of M1 Finance, minus a few mentioned above in that section, and a different interface rather than wasting your time reading the same features, such as fractional shares, no fees, managed portfolios for free (albeit heavy in bonds in most cases), etc. They have all that, just a worse interface in my opinion and some additional risks mentioned above in the M1 Finance portion of this article.
If you’d like to go with Sofi Invest I believe you’ll need to open a traditional account with them first, then you can contact them asking for the IRA account you want, unless you have a Sofi Banking account or something, as I believe you need to be a member first before you can get an IRA. Opening an account with Sofi through this referral link will give you a bonus of $25.
What about (X) Brokerage?
If you have another No-Commission fee brokerage that’s insured and legitimate feel free to contact me and let me know so I can include it here, but all the others as far as I’m aware of have fees, often lots of them. Acorns charges a monthly fee, betterment charges a yearly management fee, robinhood doesn’t offer retirement accounts, and traditional brokers like TdAmeritrade and Vanguard charge commissions for buying and selling within their accounts.
To reiterate: I’d recommend M1 Finance for the reasons listed above, however I wouldn’t say Sofi Invest is a bad choice either; it’s significantly better than the other options available other than M1 Finance. If you aren’t a fan of M1 Finance feel free to go with SoFi Invest, they aren’t any riskier or worse than traditional platforms, I just wanted to be upfront about my concerns with them and my personal gripes as someone who’s used both of the platforms.