What is the difference between a bank and brokerage IRA? Which one is better?

Answer 1

This is a great question. Unfortunately the answer isn't nearly as straightforward as the question. The answer depends on the bank. Some banks have a very limited selection of investment options for IRA's. They might only give you the option of a CD or a money market IRA. Those are horrible options. Some banks include a few mutual funds into the mix while other banks have a full service brokerage department that can provide a good variety of mutual funds as well as individual stocks. So you will have to do a little research to find your answer. As far as brokerage IRA's are concerned, most brokerage firms will give you a great variety of investment options however some brokerage firms will charge you heavy fees if you don't keep significant assets with them. I once worked for a company that would charge you $30 per quarter if your total assets were less than $50000. This would definately be cost prohibitive if you are only intending to put $4000 into an IRA. Another option that you might want to consider is to decide on a good mutual fund and contact that mutual fund company directly about opening an IRA directly with them. They usually have very low initial investment limits. Good luck to you. I hope this helped.

Answer 2

Brokerage IRA is better, you have a lot of choice for your investment dollars
Bank IRA strictly on the CD, limited option

Go for Brokerage IRA