You know you want to purchase mutual funds to plan for your retirement or another big goal. But deciding where to go to buy mutual funds can feel dizzying.
First things first: Personal finance experts recommend buying the funds directly from the mutual fund company rather than through a brokerage account. Why? You’ll save money on fees. The exception, of course, is if that brokerage account is through the mutual fund company. For example: Buy Fidelity funds from Fidelity Investments and Vanguard funds from The Vanguard Group and so on.
Next, you’ll want to look for what kind of tools the broker makes available, what mutual funds are on its platform, what the broker charges, including early redemption fees, and other factors. On costs, expect to pay a higher expense ratio for actively managed accounts — which are managed by a person or a group of people who are picking the investments and trying to beat the market — versus an index fund, which is built to replicate the performance of a specific market.
Here are some details on accounts to consider.
Top mutual fund account detail highlights
- Fidelity Investments: Offers no-fee index mutual funds
- Charles Schwab: Offers more than 4,000 no-load, no-transaction fee mutual funds
- E-Trade Financial: Offers more than 4,400 no-load, no-transaction fee mutual funds
- Ally Invest: $9.95 mutual fund commission on no-load funds
- The Vanguard Group: Long celebrated for its low-cost index funds
Best brokerage account details
Fidelity Investments launched four zero-fee funds this summer — making it the first financial company to offer mutual funds with zero expense ratios in the ongoing price war. The funds are: Fidelity Zero Total Market Index Fund, Fidelity Zero International Index Fund, Fidelity Large Cap Index Fund and Fidelity Zero Extended Market Index Fund.
You won’t have to pay management fees on these zero-fee funds because the funds don’t charge fees.
The Boston-based retirement giant, which has long had a name in the mutual fund space, also offers more than 3,600 no-transaction-fee mutual funds. The other good news? Fidelity no longer requires a minimum for opening a brokerage account. Previously, it required you to put in $2,500.
Using the long-established broker, you’ll get access to a lot of research, screening tools and its namesake mutual funds, such as its iconic Magellan fund. You can also port in all of your financial accounts on its so-called full view feature to understand all of your finances in one place, much as you might on a budgeting app like Mint.
Fidelity earned 4.5 out of 5 stars in Bankrate’s review.
- Minimum amount to open an account: $0
- Standard pricing: $49.95 ($75 for some) on the buy and $0 to sell + free for some
- Mutual fund highlights: Offers four zero-fee index funds
Charles Schwab is credited for pioneering low-cost investing in the 1970s, and the company’s pricing remains competitive to this day.
At Charles Schwab, you’ll have a wide selection of mutual funds that don’t charge sales commissions. The discount brokerage firm offers more than 4,000 no-load, no-transaction fee mutual funds.
However, the fee is steep if you move outside of those funds: You’ll pay up to $76 per purchase. That’s at the high end. Ally Invest, for instance, charges $9.95 commission on no-load mutual funds.
Unlike some of its rivals, Charles Schwab requires you to put $1,000 in a brokerage account to open one unless you meet a condition, such as automatically transferring $100 into the account on a monthly basis.
The brand is applauded for its stellar customer service and its robust online brokerage platform that is brimming with research.
Charles Schwab earned 4.5 out of 5 stars in Bankrate’s review.
- Minimum amount to open an account: $1,000 (it can be waived)
- Standard pricing: $76 when buying funds outside of the family
- Mutual funds highlights: More than 4,000 no-load, no-transaction fee mutual funds
In May, the popular fintech trading app Robinhood eclipsed E-Trade Financial in number of users. But E-Trade Financial’s platform offers something Robinhood does not: mutual funds.
More precisely, E-Trade, which was founded in 1982, makes available more than 4,400 no-load, no-transaction fee mutual funds. That list includes 124 Vanguard mutual funds — investment products E-Trade added to its platform in September.
If moving outside of these no-transaction fee funds, E-Trade charges $19.99 for commission, a price that falls in the middle of its rivals.
At E-Trade, you’ll also have access to research and tools to help you make investment decisions.
E-Trade earned 4 out of 5 stars in Bankrate’s review.
- Minimum amount to open an account: $500
- Mutual fund commission: $19.99
- Mutual funds highlights: More than 4,400 no-load, no-transaction fee mutual funds
Ally Invest is a lesser-known brand name, but don’t ignore it as a possibility.
As a company without branches, Ally focuses a lot of its attention on its digital experience. Ally Invest’s sister brand, Ally Bank, wins many accolades, including Kiplinger’s best banks for millennials. The company is also well regarded for its customer service.
Ally Invest, which was created out of Ally Financial’s purchase of TradeKing in 2016, offers access to more than 12,000 mutual funds — but they can charge fees. However, the commissions Ally Invest charges on mutual funds are considerably cheaper when compared to competitors. The platform charges $9.95 to buy and to sell no-load mutual funds.
Ally Invest earned 4 out of 5 stars in Bankrate’s review.
- Minimum amount to open an account: $0
- Mutual fund commission: $9.95 on no-load funds
- Mutual fund highlight: The mutual fund commission is cheaper than many of its rivals
The Vanguard Group
Formed in 1975, The Vanguard Group has long been celebrated for its low-cost index funds.
Its legendary founder, John C. Bogle, is credited with launching the first index fund for retail investors. That fund is now called the Vanguard 500 Index Fund.
As a Vanguard client, you won’t pay transaction fees for the more than 140 Vanguard mutual funds. The firm also offers more than 3,000 no-transaction-fee mutual funds for non-Vanguard funds. You’ll pay $8 to $20 per trade for the other funds available on its platform.
Even though it is known for index investing, Vanguard also offers actively managed funds.
It earned a 3 out of 5 stars in Bankrate’s review.
- Minimum amount to open a brokerage account: $0.00
- Standard pricing: Free for family funds + $8-$20 for others
- Mutual fund highlights: Long regarded for its low-cost index funds