Capital One IRA: Review of What to Expect From Your Account

By Jordan Wathen Markets Fool.com

When it comes to saving for retirement, individual retirement accounts can be a great choice to save and grow your wealth in a tax-efficient manner. But to get started, you'll need to open an IRA account with a brokerage to start placing trades and make investments. One popular choice is Capital One Investing, which has a few unique features some savers may prefer. Here's how its service stacks up for long-term investors.

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Commission prices by investment

Capital One makes trading easy and inexpensive, with commission prices that compare favorably to its peers. Here's how its commission prices vary by trade type.

Stocks and ETFs

Stock options

Mutual funds

$6.95 per trade

$6.95 + $0.75 per contract

$19.95 per purchase

Data source: company website.

In addition to its prototypical brokerage offerings, Capital One also offers programs called ShareBuilder and PortfolioBuilder, which offer a lower cost way to trade. ShareBuilder can be used to invest in stocks, ETFs, and mutual funds on a recurring schedule for $3.95 per trade. PortfolioBuilder can be used to purchase a whole portfolio of ETFs at one time for $18.95.

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Mutual fund selection and commission-free choices

Although Capital One doesn't have the biggest assortment of mutual funds, all of its funds are no-load funds, so you won't be slapped with any hidden charges for purchasing them. The brokerage also offers more than 400 no-transaction-fee (NTF) mutual funds, which you can buy and sell completely free.

Total Mutual Funds

No-Load Funds

No-Transaction-Fee Funds

Commission-Free ETFs

1,100+

1,100+

400+

Not available

Data source: company website.

Here's a tip: Capital One's no-transaction-fee mutual funds can be used with PortfolioBuilder, thus allowing you to make routine investments in a mutual fund without paying a fee on each transaction. This can be a very cost-effective way to build up an account over time with small investments on a recurring schedule.

Minimum deposit requirement for IRAs

Capital One is a no-minimum brokerage, so you can open an account with whatever you can afford. Keep in mind that some mutual funds have their own minimums, and you may need to make a larger minimum deposit to take advantage of some special offers. That said, rest assured that you won't be turned down just because you don't have tens of thousands of dollars to open an account.

International stocks and ADR investments

Like most online discount brokers, Capital One allows for investments in foreign companies, subject to some limitations. This table summarizes the types of investments available to Capital One clients:

Type of Investment

Availability

American depositary receipts (ADRs)

Yes

Stocks traded on international stock markets

No

Mutual funds and ETFs of foreign stocks

Yes

Data source: company website/

The main limitation with Capital One is that it doesn't allow its clients to trade on international stock exchanges. In other words, you won't be able to buy stocks on the Frankfurt Stock Exchange in Germany. Instead, you'll be limited to stocks that trade in the United States.

However, if a company has a ticker available over-the-counter or on a U.S. exchange, you can trade it. As many of the largest foreign companies have tickers on U.S. markets, you'll find that you can invest in household names such as Volkswagen or Royal Dutch Shell. Smaller international companies are less likely to maintain a ticker in the United States, however.

Mobile app

Trade from virtually anywhere with Capital One's mobile apps for iOS and Android devices. Here's how its users and customers rated its apps, as of Jan. 18, 2017.

Apple App Store

Google Play

1.5 stars

3.0 stars

Data source: relevant app stores.

IRA account fees

Capital One doesn't charge any fees for simply having an IRA, nor does it have an inactivity fee. Thus, you won't be penalized for making trades infrequently, or carrying a small balance. This may be an advantage for investors who intend to start small, as well as investors who do not plan to trade their accounts frequently.

Research tools

Capital One's research center is powered by Morningstar data, enabling investors to quickly compare stocks and funds alike. Its customers get access to Morningstar research for individual stocks, and can view a company's financials to compare them to historical analyst estimates. Similarly, funds and ETFs can be compared to alternatives that share the same Morningstar category, helping you find better-performing and lower-cost alternatives to your current fund investments.

Is a Capital One IRA right for you?

Depending on your needs, Capital One could be a good choice for an IRA. As a no-minimum brokerage that offers a fee-free IRA, it works as well for small accounts as it does large accounts. Furthermore, ShareBuilder offers a low cost (sometimes free) way to make regular purchases of stocks and funds. That said, it doesn't offer complete access to foreign stock markets, and its list of fee-free funds isn't as lengthy as competing brokerages.

To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that is a good fit for you. Visit Fool.com's IRA Center to compare IRAs by commissions, investment options, and special offers for opening a new account.

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