Money Management

You can open an IRA with many of the top brokerages. Here’s what to watch out for when you’re choosing one. 

If you want to invest for retirement, an IRA could be a good account to use. An IRA allows you to deduct the amount you invest from your taxable income. So if you make $40,000 and invest $5,000 in an IRA, you would only be taxed on $35,000.

Another big benefit of an IRA is that you don’t need an employer to offer one. You can open an IRA with a brokerage firm regardless of whether your company offers a workplace retirement plan. Although, you will generally want to max out any 401(k) match your company provides before doing so; otherwise you’d be passing up free money.

The big question you may have is whether you can open up an IRA with any brokerage firm.

Can you open an IRA with any broker?

IRAs are a very common type of account. Pretty much every online broker offers them, as well as many other financial institutions.

In most cases, the accounts come with no fees, so it will not cost you anything to open your IRA. And most brokers offer both traditional IRAs and Roth IRAs, so regardless of what kind of IRA you want to open, you will be able to find a brokerage firm that will allow you to open your account.

The process is generally as simple as providing your personal information, selecting the kind of IRA you need, and providing instructions for how to fund your account. When possible, you may want to sign up for automatic transfers of funds from your checking account so you can invest regularly in your IRA to maximize the chances of ending up with the nest egg you need for a secure retirement.

How to pick the right broker for your IRA

There are a few steps you should take when deciding on a broker for your IRA.

Decide what kind of IRA you want to open

Traditional IRAs come with an upfront tax break in the year you contribute. Roth IRAs don’t, but you can make tax-free withdrawals when you are a retiree while you’d have to pay income taxes at your regular rate on distributions from a traditional IRA. If you expect to be in a lower tax bracket in retirement, a traditional IRA would be the best option in most cases. If you think your tax bracket will be higher, you should choose a Roth and save your tax break until you’re a senior.

Consider the features most important in a brokerage firm

Different brokers have different strengths. For example, Robinhood is great for mobile trading and for beginners who want a simple trading platform. Fidelity offers a solid selection of ETFs, while E*TRADE offers thousands of no-load mutual funds. Decide what types of assets you want to invest in and what kinds of screening tools and educational materials you want available.

Research brokerage firms

You’ll want to look for a broker that has a solid reputation for providing the features and services that are important to you. You’ll also want to make sure the broker doesn’t charge any fees for an IRA or any trading commissions.

By going through this process, you can find the best IRA for you from one of the many brokerage firms that offer these accounts — and you can make sure you’re on track to be financially secure in your golden years.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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To get money, you could sell your home, do a cash-out refinance, or choose a home equity loan or HELOC. Find out how to decide which is right for you. 

When you buy a house, you often end up with a lot of equity in it. Equity is the difference between the amount you owe on your mortgage loan and the amount the house is currently worth. So if you owed $100,000 and the house was valued at $500,000, you would have $400,000 in equity.

There may come a time when you want to access this equity in your house to do something else with it. You might decide you want to make home improvements or repay high-interest credit card debts so you can pay off what you owe at a lower rate.

If you want to get cash out of your house, you have a few different options for doing so.

Sell your house

Selling is one way to get cash out of your home if you can find a buyer willing to pay more than what you owe on your mortgage. The mortgage lender will be paid first, and you’ll get to keep what’s left over after closing costs.

Of course, this works only if you don’t want to live in your house anymore. And you’ll have to wait to find a buyer, which can take time. Plus, there are closing costs to pay. These could be as much as 10% of your home’s value, since you’ll have to pay real estate agent commissions. You may also have to spend a lot of your profits paying for another place to live.

This option isn’t going to be the right one for anyone unless they happen to be selling anyway, due to all of these downsides.

Get a cash-out refi loan

A cash-out refinance loan involves doing two things at once:

Refinancing your current mortgageGetting cash out of your bank

Basically, with this option, you get a brand new mortgage that’s large enough to pay off your existing loan and give you the cash you need. Say, for example, you owed $200,000 on a house valued at $500,000 and you wanted to pull $50,000 in cash out of the house. You could get a $250,000 cash out refinance loan, use $200,000 to pay off your existing mortgage, and keep the rest.

There are a few benefits to this. You’ll only have one loan to pay, and the interest on it would be tax deductible up to $750,000 if you itemize on your taxes. Also, if you can get a lower rate than your current home loan, you could reduce your borrowing costs as well.

Unfortunately, this option likely won’t work for many people who got their original mortgage loan recently. That’s because while mortgage rates hit record lows during the pandemic and were relatively low before then by historical standards, rates are very, very high right now. It would make no sense to do a cash-out refinance of a mortgage with a 3% or 4% rate and get a new loan at a 7% or 8% rate.

Get a home equity loan

A home equity loan is another possible option to get cash out. If you went this route, you’d apply for a loan with a lender of your choosing and would be able to borrow a set amount based on how much equity you have. Most lenders only allow you to borrow up to around 90% of your home’s value including all mortgages. So if you had a $500,000 house and already owed $400,000 on your first mortgage, you would only be able to borrow an additional $50,000 at most.

Interest on home equity loans can sometimes be tax deductible, but only if you meet certain requirements — like using the money to improve the home you’re borrowing against. Most are fixed rate loans. The interest rate is usually higher than with a cash-out refinance, but lower than other kinds of loans (like a personal loan), since the house guarantees the loan by acting as collateral.

Get a home equity line of credit

Finally, you could get a home equity line of credit (HELOC). That would give you the chance to borrow up to a certain amount. This kind of works like a credit card in that you can borrow against your house as often as you want until you use up your credit line — you don’t need to decide upfront how much money you need.

You’ll typically have an adjustable rate, though, so your costs of borrowing could change. Like with a home equity loan, you can deduct interest if you use the proceeds to improve your home. And the rate is usually going to be lower than with a credit card even though you get the same flexible borrowing options.

Which option is best for you?

Deciding between these options can be complicated, but you should consider the pros and cons of each to decide which is best. In general:

Selling makes sense only if you planned to do so anyway, and it could take a lot of time to access the cash in your home as you wait to find a buyer.A cash-out refinance loan makes sense only if you wanted to refinance your current home loan, which you’d do only if you could get a lower rate than you have on your current loan.A home equity loan makes sense if you know upfront how much you want to borrow and want a fixed-rate loan.A HELOC makes sense if you want flexibility to borrow up to a set amount and don’t mind a variable interest rate.

You must also remember that your home is securing your loan, so if you don’t pay back what you borrow, you could lose the house. Don’t borrow more than you can comfortably afford.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Want to try meal subscription services without going broke? Here are some strategies to find a meal subscription service that fits your price range. 

Meal subscription services can add convenience to your busy life. Planning and shopping for every meal takes time. But with meal kits, everything you need to prepare a delicious meal appears at your doorstep.

If you’ve been considering trying meal subscription services, you may wonder how to choose one that fits your needs and budget. Here are a few tips to make it easier to select a meal subscription service that won’t leave you feeling broke.

1. Review your finances

You should assess your finances before signing up for a meal subscription. If this will be a new expense for you, it’s essential to consider your budget so you don’t go into debt. You can avoid overspending beyond your means by determining how much you can comfortably afford to spend on meal subscription service expenses.

To calculate how much you can realistically spend, you may want to review your current grocery spending habits to see how much money goes toward monthly food costs. If this new expense is a priority, you can reduce your grocery spending to free up cash to spend on meal kits. If you need help with budgeting, check out our list of the best budgeting apps.

2. Consider ordering veggie-only meals

Now that you know how much you can afford to spend, you can research your options. There are many meal subscription service companies, and each company has various plans. As you compare plans, you may notice significant price differences between meals with meat and those without. You might consider ordering vegetarian meals to save money if you’re on a tight budget. You can always bulk up some of your meals with additional protein, like beans.

3. Order fewer meals

If you’re worried that meal subscriptions are out of your price range, you might consider ordering only a few meals, such as getting three meals delivered each week instead of six. This is an easy way to reduce the cost of the service while still adding convenience to your life. With this strategy, finding a service that doesn’t drain your bank account could be easier.

4. Research local options

Instead of rushing to order the meal subscription kits you see advertised on TV, you may want to explore local options. There may be meal services in your area, possibly offered by local caterers. It’s possible that these services could be cheaper or they could provide more food at a similar price point. You may find smaller meal service companies in your community that offer already-prepared meals. That could be an even more convenient solution for your busy lifestyle.

Give multiple services a try to find the right one for you

With so many meal subscription options, it can be overwhelming to select one. The good news is you can test out multiple services to see which works best for your needs. But make sure you don’t overpay when trying a new-to-you service.

Many popular meal subscription companies offer discounts to new customers, so check for coupons before you place your first order. You can use coupon apps to find active discount codes. For additional ways to save money, check out our personal finance resources.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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