Mutual Funds or Mutual Fund companies as the name implies, are companies that manage and sell Mutual Funds. An example of these would be Vanguard, TrowePrice, and Fidelity. Mutual Funds can be great investments for your 401k rollover IRA and opening a rollover IRA at one of those companies might be a good idea. As with many things, there is always the good and the bad to opening your 401k rollover IRA at a Mutual fund company.
The good: You don’t have to pay any commissions when you buy or sell no load Mutual Funds directly from the Mutual Fund company. You still need to pay a sales charge when buying or selling Mutual Funds with “front load” or Mutual Funds with “deferred load”.
The bad: Your investment options in your IRA account are only limited to Mutual Funds. You can not buy individual stocks, ETFs, or bonds if you wanted to. Furthermore, you can only buy and sell the Mutual Funds that this company sells. You are limited in your investment choices. In the event of bad performance or if you feel the Mutual Funds that this Mutual Fund company sells no longer meet your needs then you are stuck and have no choice but to move your account and transfer it to another company.
