Quick Read: New Investing Apps In 2018
Here is a quick read on some of the more popular new investing apps I have come across in my research. I have included a very brief summary of benefits and concerns:
Acorns - Benefits: Free for college students, robo-adviser, $5 minimum investment, saving "spare change" from purchases and also earn / invest cash back from retail partners, educational content; Concerns: flat management fee - $1 - $3 per month (could be a high percentage compared to other advisers if your balance is low), until your balance reaches $5,000 then 0.25% fee kicks in, offers a small investment portfolio, no active management (passive management may under-perform in certain market environments)
RobinHood - Benefits: Ease of use, zero commissions, access to low-cost exchange traded funds (with some digging); Concerns: user interface serves up suggested individual stocks to invest in and may encourage stock-picking (difficult to be successful in), stream of various notifications about stocks in portfolio may encourage frequent trading (higher likelihood of losses), and allows margin investing which can be dangerous for inexperienced investors since you can lose more than your investment because you have to pay back the loan
Swell - Benefits: Socially responsible investing portfolios, robo-adviser, $50 minimum investment, management fee is all-inclusive, invests in individual stocks; Concerns: 0.75% management fee is high compared to other robo-advisers, no joint account capability, no 401(k) rollover capability, no tax loss harvesting functionality, relatively new platform and still working out the "bugs"
Betterment - Benefits: robo-adviser that learns your investment goals / risk preference and builds a customized portfolio of low-cost ETF's for you, offers financial advice from experts and tax-smart strategies, low all-inclusive fee of 0.25% - 0.4% of account balance plus fund level fees, no minimum balance and no fee for zero balance; Concerns: no ability to pick individual stocks or active management, some bad reviews
Wealthfront - Benefits: same functionality as Betterment, low all-inclusive fee of 0.25% of account balance plus fund level fees, no trading commissions, withdrawal or transfer fees, automatic daily tax-loss harvesting on taxable accounts which can lower your tax bill and give you more money to invest; Concerns: $500 minimum balance, so-so reviews
Wealthsimple - Benefits: low account minimum and no extra fees, socially responsible investment options, Shariah-compliant portfolio, investment in fractional shares, access to financial planners, free tax-loss harvesting, education focus; Concerns: high management fee compared to other advisers, higher fees on socially responsible funds vs typical ETF's, lack of personal finance tools
Here's a nice fee summary courtesy of Policygenius:
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