Investing

Investment Brokerage Apps: My experience

My aim with this article is to provide a condensed view of all the various investment brokerage offerings that are out there and what I believe are worth considering if you’re going to start investing.

This by no means covers all the applications/services out there, but includes my top picks of “fee-free” investing avenues.

The Options

As I mentioned, there are many options to choose from in this diversified market and the one’s I’m suggesting are based on my usage/takeaways.

Robinhood

This was the app that basically started offering commission-free trading opportunities to customers. At the time, each trade (Buy/Sell, 1 share or 100) could cost anywhere from $5 to $10 depending on your brokerage.

Robinhood pretty much revolutionized the market and allowed people to buy/sell (only) whole shares of whatever stock/ETF they wanted. The platform is a lot more refined today but obviously has its pro’s and con’s.

Positives

  • Commission-free trading
  • Ability to sign-up for their money account (earns 2.05% APY (as of October 2019 on unused cash)

Shortcomings

  • Inability to buy fractional shares
  • Unavailability of auto-dividend reinvesting
  • Lack of useful research page in free version

Takeaway

I started investing with Robinhood and about 50% of my distributed portfolios is with Robinhood. I’m no longer adding more to that portfolio as my goals have changed and I found a better platform that facilitates those objectives a lot better.

That being said, it is a great starting point but not recommended if you’re investing under a $1000 to make a noticeable dent. However, if you click the button below, you’ll get a free stock when you sign up and fund the account.

Charles Schwab

With the recent changes, I believe Charles Schwab is a great brokerage offering for any type of investor: new or experienced. The $0 account minimums, large selection of fee-free mutual funds as well as one of the best in class research offerings make it a great choice.

While I don’t have that much invested in it, I do feel it is worth opening especially their brokerage+banking account the latter of which offers “no ATM transaction” fees on international ATM debit-card withdrawals.

Positives

  • Commission free trades
  • One of the largest ETF/Mutual Fund option pools
  • Checking Account with no minimum and no international ATM withdrawal fees
  • Extensive research available for new/experienced users

Shortcomings

  • Inability to buy fractional shares
  • Dividend reinvestment plan (DRIP) – cannot reinvest dividends “automatically” on other companies
  • High fee ($49) for transaction-fee funds not on their free list

Takeaway

This really a platform I recommend everyone join especially given their Debit Card offering. I travel a lot and having that ability to withdraw money from an ATM without paying 3-5% transaction fees is a great perk. Additionally, if you are completely lost about the investment market as I was when I started investing, the research they offer really is the best in class.

Their free ETF/Mutual Fund offerings are put together really well and you can see what they’re comprised of so you know exactly what your money is being put into.

If you wish to start investing at Charles Schwab, you’ll get $100-$500 if you open both their brokerage and high yield checking account (funding the latter).

Wealthfront

I started banking with Wealthfront to build up my savings which aren’t invested anywhere or really doing anything for me but still earn a modest 2.07% APY (as of writing this article) which is down from 2.57% when I initially opened the account. The rates have been declining due to the US FED lowering interest rates (and the economy has high levels of uncertainty).

However, Wealthfront also offers a robo-investing tool which asks you a series of questions when you first create your account to give you a risk-score rating. Based on that number, the “robo-investors” will automatically invest your deposits. Being a bit skeptical, I put in $1500 and here’s my current portfolio (which I cannot change manually).

NOTE: This is a week snapshot.

Positives

  • No need to actively manage
  • Invests based on risk profile
  • Trades fractional shares
  • Ability to re-invest gains
  • No minimums

Shortcomings

  • Since it is automated, you cannot really force a trade
  • No research provided on the site

Takeaway

Robo-Investing has recently been picking up popularity but I have not had enough history with this platform to give a conclusive review yet. Also, I am curious to see how the platform adjusts when the markets enter a bear market vs bull market given the uncertainty and threat of a recession.

You can open up a Weatlhfront high yielding checking and robo-investment account to receive the first $5000 in investments managed without a fee (otherwise it is 0.25% ). If you refer more friends and they sign up, you get an additional $5000 of fee-free investments (not $5000 but no fee to manage the amount).

M1Finance

I recently came across M1Finance and have to say it has quickly become my to-go choice as a portfolio management/building tool. The ability to allocate % terms of my holdings from a pie really helps me manage me investment strategy better.

My objectives with my portfolio have changed to a strict Dividend Growth Investment strategy based on my principal investment. That means, whether the stock gains 5% or losses 5% value, I will keep it for the long run as it will keep paying out dividends (which will continue to grow over time).

My portfolio of stocks/ETFs is based on my research of the underlying value of the same as well as my interest in those holdings. If I feel I am not as confident but still want to invest, I can allocate a 5% as opposed to buying a whole bunch of shares.

Positives

  • Flexible portfolio allocation system
  • No trading fees
  • Allows fractional trades
  • Re-invests dividends into enter portfolio automatically
  • Shows Target/Actual investments
  • Provides good research and stock data

Shortcomings

  • Trade timings are out of your control and automated
  • Accounts with less than $20 in funding and no trading activity for 90 days are charged a fee
  • Inability to consolidate external accounts like Wealthfront allows

Takeaway

This is more personalized and my perspective: I will be investing 100% into my portfolio through M1Finance as my primary vehicle to meet my DGI strategy.

I find the most value in this brokerage because of that flexibility to allocate my holdings in proportions and not have to figure out an exact number. At the end of the day, I want this portfolio to generate a passive income based on my investment irrespective of daily price fluctuations which will be reinvested to grow the portfolio.

Example DGI portfolio

Once I am ready to start cashing out, I can then opt out of “Auto-Invest” and get a “paycheck” which will cover my monthly living expenses.

You may open a M1Finance using the link below and get $10 when you fund it.

Final Advice

The goal when deciding to invest your hard earned money or savings should always be made clear. If you think you’ll make a windfall gain and play the market to get massive profits, this is probably not for you – people with a lot more money have tried and lost a lot more than they had to begin with.

Investing larger amounts will always return a higher yield vs a yield from a smaller amount. Which means, a 8% growth from $10,000 in a given year is worth $800 which is a lot more than the same gain on $100 which is $8.

It takes time to build a portfolio and a lot of research should go into what you’re buying into. Without proper understanding or research, you are putting yourself at unnecessary risk – so please do not take this lightly (it is for your own sake).

For the DGI strategy, I research companies/holdings through Charles Schwab and Seeking Alpha mostly as they offer everything I need.

Seeking Alpha is really useful if you just search a company’s ticker (the ID they are assigned) and you can check it’s dividend history and growth, etc…

It’s never a bad time to start investing – as long as you do it prudently knowing the risks involved – so I hope my views on the apps I have used help you deciding which one to start investing on!

Use another brokerage? Comment below which one and why!

The Credit Traveler Disclaimer

Content on this blog represents one individual’s experiences and viewpoints, and your experience may differ. The owner of this site is not an investment advisor, financial planner, nor a legal or tax professional. Articles here are of an opinion and general nature and should not be relied upon for individual circumstances. Research and obtain professional advice regarding all credit decisions before attempting to duplicate any of the techniques described on this website.

1 comment on “Investment Brokerage Apps: My experience

  1. Pingback: The Credit Traveler | DGI #6 New Year and quick update

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