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Retirement investing: An analysis of the best companies and best practices to look for

What are the best companies for retirement investing? What should you look for?

Either you manage your own retirement investments or you get someone else to do it for you.

The ‘not for profit’ Employee Benefit Research Institute estimates that three years of retirement fund gains were wiped out by the stock market crash of 2007. All the excellent capital growth from 2004 to 2007 has been reset since this past major recession. No investment company was immune to these losses, now is a good opportunity to really seek out the best companies for investment, based in part on how their customers performed over the past recession.

The Roth and the traditional IRA (individual retirement account) have quickly become the retirement investment vehicles of choice for people with an eye on their future well being. They are promoted by the government to help people rely less on social security. Their popularity stems from the tax-free withdrawal benefits in the Roth IRA, and pretax investing in the traditional IRA. With a Roth – you can withdraw not only all your contributions but also the total capital gains earned on the money, TAX FREE. The age at which you can draw these benefits is set at 59 and 1/2.

The increased choice in Roth IRAs is not necessarily a sign of increased savings for retirement planning generally. Roth IRAs have been heavily promoted by the big players in the investment management field and to a large extent have created a switch from traditional pension plans.

The best companies include big names such as Vanguard, Fidelity Investments, Citigroup, JPMorgan Chase and TD Ameritrade – they all have been actively pushing for and helping in this ‘rollover’ of IRAs.

So what are the best practices to look for in a retirement investment fund manager?

Managing a retirement investment account (Roth or Traditional IRA) on your own is a decision you must make, but be certain you know what you’re doing before you think you can jump in and make big money – you may do the exact opposite and lose.

401k employer sponsored retirement accounts are more limited in the range of investment options open to your management company. Investing in an IRA allows you more flexibility and the widest possible choice of investment funds and securities. Brokerage discount firms like ‘Interactive’ or E-Trade tend to have the widest range of stocks, bonds and mutual funds.

Look for discount brokers who do not penalize low level investors for a low number of trades and to stipulate a minimum start investment sum.

Another good practice to look for in a retirement investment Roth or Traditional IRA management company is when they encourage you to maximize your contributions as early as possible in any given year.
A retirement investment plan is not one homogeneous lump of savings.

Looking carefully at the key investment funds used by the large investment companies can help you pick your own stocks and securities. The key advantage of the self-directed investment approach to retirement planning is that all of your money stays in your fund rather than going into fees and commissions. But be careful – Do you believe you could foresee the bursting of the next stock market wave before it happens and move your assets into bonds or certificates of deposits until it’s safe to invest again? No? Then it’s best to look for an investment company to help you set up a plan – so you’re not investing on emotion, rather with a defined entrance and exit strategy.