Gone are the days of $7 per trade or 2% asset base fees required to be active in the stock market. Before, sites like ETRADE and Scottrade were the only platforms to manage your investments. I, along with millions of others, have been subjected to atrocious fees since the beginning of internet trading and our net worths reflect it. There were two main problems with these fixed amount fees per transaction. One, Investors were required to trade only a few securities and not trade very often, thus losing the benefit of diversification. Secondly, if investors overcame problem one by investing in index funds, investors forfeited the opportunity to beat the market.
Of course, accepting an annual fixed % of assets fee can greatly reduce your long term profits and extend your path to retirement by decades. If you'd like to learn more about the costs of fees, you can read our article here.
However, revolutionary software has recently been created that has turned the online investment industry upside down. Robinhood is what we recommend using here at FMI, but there are a variety of new applications that are pushing advertisements all over social media.
Robinhood - Overall: 8/10
Fees: 10/10 Capabilities 8/10 Usability: 9/10 Data: 6/10 Analytics: 4/10
Robinhood is my personal favorite trading platform for one reason. There are NO COMMISSION FEES. Fees may sound small at first such as $7 per trade, or 1% of asset value, but many people overlook the long term impact these fees have on their investment accounts. You can read this to learn how Robinhood trading works, but just know this is the best investing platform available today.
Acorns - Overall: 5/10
Fees: 6/10 Capabilities: 4/10 Usability: 9/10 Data: 1/10 Analytics: 1/10
Acorns links with your bank and rounds up your purchase transactions to the nearest dollar and invests the change in the market. You can also setup additional contributions. Acorns is a really great way to commit to consistent contribution. However, for people who make a lot of transactions and have lower net worths, you can end up easily adding more funds to your account than you wanted. Also, the fees for Acorns are relatively high for people with low investment balances. The $1/month fee only becomes worth it once $5,000-$10,000 are invested. Acorns does a great job of getting you to sign up for a second retirement account which costs an additional $1/month. Investors are not able to select individual stocks, but can select a Strategy: Aggressive, Moderate, Conservative ect. Overall, this application is a good choice for the investor who has plenty of dough and does not want to think about investing at all.
SoFi - Overall: 7/10
Fees: 10/10 Capabilities 6/10 Usability: 10/10 Data: 1/10 Analytics: 2/10
SoFi is a solid no fee bank that offers loans, spending analytics tools, brokerage services, and savings/checking accounts. Their savings account earns a 2.25% return which is standard in today's market. They offer a checking account, debit card, and reimburse ATM fees. From a banking perspective, they are solid. On the investment side, they allow personal stock picking with zero commission fees, but also have an interesting auto investor product that picks stocks for you. Currently, they do not charge fees for this product but may do so after 2019. They also provide access to licenses financial advisors. From a data perspective, SoFi is quite basic. The tool displays basic price and fundamental statistics with some news. However, their stock universe is relatively small (while coving a decent amount of US companies), but most frustratingly, their stock searching capabilities are lacking. They offer 'SoFi ETFs', ' Popular Stocks' and 'Socially Responsible' stocks and strongly influence the user towards investing in them. There is essentially no stock analytics and no stock picking recommendations beyond that. Overall SoFi is a very solid lowcost online bank with very standard investment services. This is a great option for a brand new investor who is not interested in being an active portfolio manager.
VectorVest - Overall: 6/10
Fees: 5/10 Capabilities 6/10 Usability: 8/10 Data: 7/10 Analytics: 6/10
VectorVest is stock data analytics company with the goal of offering detailed stock reports for a monthly fee. For $10 per month, users gain access to VectorVest stock reports, a variety of stock screeners, and a robotrader. The site provides market news and VectorVest fund information, however, this information is generally a paragraph format of the data they provide. The 11 pre-determined VectorVest stock screeners have descriptions such as 'growth' and 'value' but it is unclear on what metrics they are screening for. By attempting to make stock screening simple, they have disabled the user from understanding what is going on and how to identify which stock screener is best for the current times or when to change. The robotrader seems quite promising, but since it is obscure in nature and VectorVest seems to be a biased fund manager rather than a broker, it is difficult to trust the software at face value. Overall VectorVest has good intentions. They want to aide beginner investors in getting comfortable with more advanced investing tools. However, the tools and information they provide are too basic and narrow to consistently beat the market and provide deep value.
Yahoo Finance - Overall: 8/10
Fees: 10/10 Capabilities 9/10 Usability: 9/10 Data: 7/10 Analytics: 6/10
Yahoo Finance has made a spectacular leap back on to the financial tool scene with the recent launch of its new and improved mobile app with in-app trading capabilities by linking your brokerage. They can sync with almost every brokerage, including Robinhood! The desktop application has not changed much, providing historical pricing, market news, portfolio, and watch list capabilities and advice videos. They have also added basic stock screeners with the ability to make your own (although an extremely simple one)
The best part about Yahoo Finance is it is free! With integrated trading, Yahoo adds the most value at the lowest cost for any investor. However, without tools to do detailed market-wide fundamental analysis, Yahoo Finance still must be partnered with another analytics engine to maximize returns.
Titanvest - Overall: 5/10
Fees: 4/10 Capabilities 6/10 Usability: 10/10 Data: 3/10 Analytics: 4/10
Titanvest is a US only, sleek, modern robotic portfolio manager that requires linking to your bank and invests your money for you. The AI tracks hedge fund holdings and invests your money in the top 20 stocks most held by hedge funds. To increase your potential returns, it also shorts the market with 20% of your assets 'hedging' against potential market downturns. Titanvest provides informative videos along the way to teach you about the companies you own and why the investment makes sense. However, an analytics engine like this always comes at a price, and Titanvest charges a 1% of assets fee each year to invest your money using their strategy. This may sound small, however, a 1% fee to invest your money in stocks like Visa, Google, Wells Fargo and other SnP500 stocks is a bit much. A 1% fee over 30 years on a $10,000 investment would reduce your theoretical $90,000 of earnings to $66,000 or a $24,000 cut due to compounding. So as promising as this modern tech looks, the top 20 holdings of hedge funds (depending on the fund, and Titanvest is not clear as to which hedge funds are included) are not as surprising as you would suspect, and an analytics behind the engine like this too simplistic to merit a 1% fee. You would be better off in an index investment.
The amount of financial recommendations, brokerages, tools, apps, robotraders, advisers, and opinions out there is staggering and confusing for most. Most people do not want to read the fine print and are happy to be invested, regardless of the fee or strategy implemented. Unfortunately, this behavior leads to many people losing tens or hundreds of thousands of dollars while being promised massive returns and early retirement. Investing is simple. Its so simple, and our softwares are so powerful in today's age that it should be essentially free. Robinhood is the best application available today for the easiest, cheapest investing. SoFi is also a good option if you are looking for banking capabilities and don't mind a smaller investing universe. The focus here is no fees. If you don't know how to invest, use these tools to invest in index funds. If you do know how to invest, use these tools along with your preferred stock screener or data analytics engine to identify investment opportunities that will beat the index fund returns. We offer a fantastic AI engine that integrates years of financial academic research into a fundamental and cataclysmic stock universe analyzer that filters the best investment opportunities available today. However, you do not have to use our tools, and if you are new to investing and simply want to learn, invest your money in index funds, learn to invest, and practice using offline excel models or online portfolio games. Investing is fun! And armed with this knowledge, you can go forth and invest with confidence knowing what you need to do to maximize your retirement and mitigate your fees.
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