Roth IRA Charles Schwab Review

Roth IRAs offer many benefits though the contributions are not tax-deductible. Taxpayers enjoy the benefits of withdrawing their money free of tax after reaching the statute age of 591/2. It appeals to many people, but only if they must be smart in choosing the right kind of Roth IRAs. 

Choosing a reliable Roth IRA is not easy. Charles Schwab IRA provides more than benefits but strong support for IRA savers on the way to achieving their aims.


What Is a Roth IRA?

An alternative to a traditional individual retirement account, a Roth IRA also offers tax benefits to wage earners to save for retirement. The retirement plan requires mid-to-long term savings to obtain investment benefits and tax benefits. A Roth IRA has the particular characteristics investors should take note of:

  • After-tax contributions: Unlike traditional IRAs, a Roth IRA is an after-tax contribution account. However, the contributions and earnings are tax-free only after savers reach a certain age and hold for at least 5 years.
  • Multiple account types for Roth IRAs: Different types of financial institutions offer Roth IRAs. They are banks offering CDs; brokers and robot-advisors offer stocks, bonds, mutual funds.
  • As different institutions provide various investment products, investors should beware of their risks. For example, Federal Deposit Insurance Corporation(FDIC) has insured CDs, but the yields are low and may not catch up with your cost of living when you retire.
  • Stocks may protect this kind of risk and be better tools for asset growth, but price may always go ups and downs. Bonds are asset protectors; nevertheless, the yields are still low. You should talk to your investment advisor and retirement professional for any further actions.


Pros of Charles Schwab Roth IRAs

1. Fees & Account Minimum Requirements

You will be happy with its zero-commission of online stock trade offer. Besides, more than 4000 mutual funds and ETFs from Charles Schwab are also free of commissions and transaction expenses. Even if you like to trade options, the cost is just 0.65 dollars per contract. 

What’s more, you need not pay anything as a deposit when you open an account or if you even trade less within your Roth IRA. There is no annual fee at all.

There are no account minimum requirements for opening a Roth IRA. You have 2 ways to open an IRA account: you can open an account with the Charles Schwab website or visit any local Charles Schwab branch. All you need to get prepared are your social security numbers, beneficiary information.

• Wide ranges of investment choices

As you can see, Charles Schwab offers a long string of choices like stock and bond trading services. You can choose more than 7000 mutual funds and ETFs available from Charles Schwab. Among those, ETFs and Schwab bond index funds are extremely low in expense. Therefore, you can put more into saving and earn more. 

You should note that you can invest in 4000 more out of 7200 funds without paying commission and transaction fees. Whether the choice of offers is enough depends on personal preferences and objectives, but they are fit for most investors.

Furthermore, Charles Schwab helps savers screen funds by creating a mutual fund and ETF Select list. Investors can find their favorite funds based on criteria such as investment tools like stocks, bonds, or Morningstar category, expense ratio, and benchmark index. It is user-friendly too for beginners and advanced investors as well.

Charles Schwab also has a “Personalized Portfolio Builder” that helps you create a tailor-made portfolio based on your risk tolerance, financial goals, and time to retirement. You are sure not to stay away because of the diversity of investment products.

Fractional shares are now available to IRA investors. You can buy a portion of a share for a proportion of a full price. It is called “Stock Slices.” You can buy 10 slices at a time, but the “slices” are now limited to components of S&P 500 companies only. 

2. Strong Research Support

Customers can come across in-depth research and analysis through Charles Schwab’s website. 

• Equity research

Stock investors get earnings news and analysis from Reuters, Credit Suisse, MarketEdge, and Ned Davis and among 14 others.

Mutual funds & ETFs

Charles Schwab also provides Morningstar’s fund’s ratings and commentary services.


Investors can screen and select their picks through the Schwab BondSource system. The bond analysis is available from Standard & Poor’s and Moody’s.

In-house Research

Besides, Charles Schwab has in-house research experts offering investments and rating services to clients.

3. Technology

Charles Schwab has put many efforts into developing user-friendly investment tools to help clients manage their Roth IRAs. 

StreetSmart Edge

It is the flagship and robust trading platform for IRA clients and others. You can download it from the website, or you can use the cloud-based online version. What is impressive is you can make not just simple trades; you can use the navigation bar to create a personal and customizable monitor to do sophisticated tasks like multiple trading with different types of market orders at one time. 

The system also allows you to monitor your market exposure continuously. You will be impressed with the unique feature, the “ Balance Bar,” which lets you see your portfolios and buying power and build up and edit multiple market layouts. Also, you can watch the news feeds and live CNBC coverage within StreetSmart Edge.

Moreover, it has trading programs called “Streetsmart Central” tailored for options investors.

It lets you trade on its official website. Through it, you can trade stocks, bonds, ETFs, and options with market orders. Besides, you can access multiple news sources and market information instantly.

Virtual Assistant

You will access market quotes and information like stocks and bonds. Even you can organize a watchlist by it. All you have to is to download the “Schwab Skill” in Amazon’s Alexa.

Mobile App

Like Charles’s other technologies, through Schwab mobile and StreetSmart mobile apps, you can monitor your portfolios and watch market news. You can trade and deposit checks, set alerts with voice commands via a virtual assistant. You can also integrate the app’s information and communication with the apple watch.

Technology support is Charles Schwab’s selling point in helping clients better manage their IRAs. 

4. Customer Support

You may not expect or believe Charles Schwab works 24/7 a day, seven days a week! Just dial a number, and you are connected, even at midnight. Of course, you may send emails to them and get a reply as soon as they can. If you prefer online chat, they will send you the greetings around the clock!

You can reach them at the 300 branches across the country as early as 8 pm. They will be expecting you until 5 pm. Some branches are open to business on Saturdays. So check before paying a visit to one of them.


Cons of Charles Schwab Roth IRAs

You should note the following things before opening a Roth IRA with Charles Schwab:

1. Low cash sweet rate

Idle cash parks in a brokerage account and earns only 0.01%. You can transfer it to Schwab Value Advantage Money Fund(SWXXX). It has no minimum requirements and earns a higher rate of interest. You must do it yourself.

2. Fractional Shares restriction

Currently, investors only buy fractional shares relating to S&P 500 companies. Other brokers like Fidelity Investments or Interactive Brokers have no such limitations.

3. Transfer out Fees

You have to pay $50 for full transfer and $25 for partial transfer out of assets from Charles Schwab.

4. Forex and Cryptocurrency

You may be a little disappointed because Charles Schwab doesn’t offer these services now, but rest assured, they are doing integration work with TD Ameritrade since its acquisition in 2020. TD Ameritrade is offering the services, so hopefully, Roth IRA investors can access the services later this or next year.


Is Charles Schwab Roth good for Roth IRAs?

You will find they’ve developed the most robust technology to back up full service for stock trading like SmartStreet Edge, BondSource for bond trading, and SmartStreet Central for Options trading as well. Apart from technology, Charles Schwab provides 24 hours day services, so not a single day is missed for clients.


Is Charles Schwab Suitable for Beginners?

Besides the user-friendly interface system, no minimum requirements and low expense funds will benefit investing beginners. All-round customer support provides a cushion to investing beginners in managing their IRAs. User-friendly trading systems and full coverage of investment analysis are for beginner investors easy in investing.


Is Charles Schwab Roth IRA Right for You?

More than just for beginners, the systems offer multi-functions for sophisticated investors to pinpoint market opportunities. Whether web-based, downloaded software and mobile app, combined with professional research and analysis from outside or in-house experts, they are a strong back-up for experienced and active traders and investors.


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