Please ensure Javascript is enabled for purposes of website accessibility

Why the MyRA Isn't Your Best Retirement Choice

By Dan Caplinger - Feb 2, 2014 at 8:42AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The new MyRA has some benefits, but it's far from perfect. Find out why.

President Obama recently announced his new retirement account, the MyRA, which he hopes will help raise the number of people who save for retirement. But even though the MyRA should help give greater access to retirement-savings options for many people of modest means, it has some shortfalls that make it a less-than-perfect retirement saving option.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains some of the problems with the MyRA. Even though the MyRA encourages tiny contributions, the only investment choice participants have is in bond-like investments. That doesn't give investors the growth prospects they could get from Vanguard Total Stock Market ETF (VTI 0.53%), SPDR S&P 500 (SPY 0.46%), or other stock investments. Dan notes that with many brokers offering access to commission-free index ETFs and mutual funds for those who are able to contribute as little as $50 to $100 per month, many people don't need the additional flexibility of $5 minimum contributions that MyRAs offer and should instead take advantage of the growth opportunity that stocks provide.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of TD Ameritrade. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SPDR S&P 500 ETF Trust Stock Quote
SPDR S&P 500 ETF Trust
SPY
$421.92 (0.46%) $1.93
Vanguard Index Funds - Vanguard Total Stock Market ETF Stock Quote
Vanguard Index Funds - Vanguard Total Stock Market ETF
VTI
$212.39 (0.53%) $1.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.