About Folio Investing
Folio Investing opened in the year 2000 with the mission of providing investors with an alternative to high-fee Wall Street brokers and money managers who paid no attention to investors with accounts under $500,000. Like many e-trading companies, Folio developed a business model that democratized stock trading by reducing fees and opening the markets to millions of investors. The company went a step further than most by developing its folio product.The folios allow investors to own a portfolio of mutual funds, ETFs and individual stocks. With over 100 pre-made folios to choose from, many investors opt for a ready-made option that suits their goals. The folios offer customized investing and tax and expense management tools. Investors can adjust holdings within their folios or even make their own folio from scratch.
Five Principles for Folio Investing Success
Folio Investing stands against fads, hype, and hysteria. Its philosophy is firmly against churning. Churning is an old Wall Street practice of convincing investors to buy and sell stocks to generate commissions. Folio Investing was built for long-term investors who understand the importance of disciplined trading strategies. The company recommends that investors follow five principles for lasting success:
- Invest in portfolios with variety and balance.
- Pay less in commissions to earn more.
- Tailor your portfolio with your goals in mind.
- Invest with consistency.
- Actively manage your taxes.
Product Specs
To invest according to its five principles for success, Folio Investing provides 160 ready-made folios. These folios are categorized according to investment goals and risk tolerances. Aggressive investors have many folio options, and so do conservative investors interested in an income-oriented strategy. Investors can utilize these folios as part of their IRA account.
The folios are designed to utilize fractional shares. Because of this, investors add the dollar amount they wish and never need to worry about not having enough money for a share of all the securities in the folio. The system automatically distributes the money across the folio.
Each folio consists of a combination of mutual funds, ETFs and stocks. Investors may simply buy and hold the folio or customize. To customize, investors view the listing of securities in the folio. They can remove an investment from their folio. Investors can also add an investment they prefer.
Total customization provides a great advantage for investors willing to put in some extra work. If you have advanced investment knowledge and wish to employ your own allocation strategy, you can do so by buying shares of any stock, mutual fund, or ETF and adding it to your folio. Because of the fractional share feature, you can customize regardless of your account balance. Customers can also sign up for re-balancing alerts.
Folio Investing offers research tools, which are powered by QuoteMedia. Investors can search any stock, mutual fund, or ETF. The research feature provides quotes, charts, news, analyst recommendations, financials, and historical financials.
The Tax Football
It only matters how much you keep. High investment returns look fantastic on paper and pad the ego, but it’s what you have after taxes that you take to the bank. The Tax Football feature searches your portfolio for tax harvesting recommendations. Many investors can raise cash without paying taxes by using the Tax Football. This feature will search your portfolio and find recommendations for tax offsetting moves that shield you from a tax bill when you need to raise cash.
Customers also benefit from automated tax strategies for investment folios. Investors have ten automated strategies to choose from. They also save time and aggravation at tax time because of the automated tax lot accounting feature.
Pricing
Customers choose between the unlimited and basic plans. The Basic Plan is designed for inactive traders and small-dollar investors. The Basic Plan is commission based. Investors pay $4 per transaction. A $15 quarterly fee is applied if the customer makes fewer than three trades in a quarter.
The Unlimited Plan provides the best value. Trades are unlimited for $29 per month. No matter how many folios you trade, create or adjust, you never pay over $29 per month. Frequent traders with account values above $25,000 have a hard time finding a better way to cut commission costs.
How It Compares
We picked a few similar products available on the market to see how they compare.
- Merril Edge
- Ally Invest
- E-Trade
Comparison Table
Products | Company Logo | Where To Invest |
|---|---|---|
Folio Investing | | |
Merrill Edge |  | |
Ally Invest |  | |
E-Trade |  |
Folio Investing
Fees & Commissions
If you trade frequently, the Unlimited Plan is tough to beat. Trade stocks, ETFs, and mutual funds—as much as you want for $29.99 monthly. If you trade infrequently, you can opt for the Basic Plan which comes with a $4 trading fee. There is a minimum charge of $15 per quarter on the basic plan.
Investment Products
Folios are portfolios an investor can purchase with any amount of money. Because you buy a fraction of each piece of the portfolio, you can diversify with a small amount of capital. The folios consist of stocks, mutual funds, and ETFs. You can also customize the existing folios or create your own.
Account Minimum
There is no account minimum.
Customer Service
Educational tools explain the products in detail. Novice investors can grasp the product’s design and benefits. Customer service is available online and by phone.
Pros
Cons
Merrill Edge
Merrill Edge provides many benefits that increase trade profitability and decrease transaction costs; however, some of these tools have restricted access. Merrill Edge has partnered with Bank of America. This provides convenience and savings to Bank of America customers. Working with Merrill Edge also entitles you to work directly with a Merrill Edge Financial Solutions Adviser at no additional cost.
Fees & Commissions
Investors pay $6.95 per trade. The company offers a promotion with 300 free trades during the first 90 days after account opening. Additional free trades are available for high balance customers. There is a $49.95 outgoing transfer fee and no free ETFs.
Investment Products
Merrill Edge has some of the best research tools in the business. It offers videos, articles, webinars, and a searchable database. The company also provides a Morningstar classroom. Mutual fund investors have 3,300 non-transaction options available. An app provides streaming quotes and research material. The MarketPro Platform caters to active traders. Traders consider it robust; however, you need a $50,000 account balance to gain access.
Account Minimum
There is no account minimum.
Customer Service
24/7/365 customer service options provide investors with the helping hand they need or a quick problem resolution. Customer service is also available at any Bank of America branch.
Pros
Cons
Ally Invest
Fees & Commissions
Ally earns the title of deep discount broker. Standard trades are $4.95. Active traders (over 30 trades per month) qualify for trades at $3.95. Large balance customers may qualify for bonuses.
Investment Products
Ally provides trading for stocks, bonds, mutual funds, free ETFs, options, Forex, and futures. The online platform provides ease of use and real-time quotes. Research options are robust. Automated portfolio management helps busy investors. Options tools include a strategy scanner and bid/ask calculator.
Account Minimum
There is no account minimum.
Customer Service
24/7/365 phone, email, and online customer service support for customers.
Pros
Cons
E-Trade
E-Trade is the place to be for active investors. It provides robust research and analysis tools and an idea-generating platform for active traders. It also provides one of the most advanced options platforms. E-Trade offers trading for stocks, bonds, mutual funds, free ETFs, options, and futures. E-Trade provides great platforms for new investors, including research and educational material. Those who trade on the go like E-Trade’s mobile app.
Fees & Commissions
$6.95 per trade isn’t the cheapest, but the platform has great research sources.
Investment Products
E-Trade provides a web platform that offers robust research, free streaming quotes and data, market commentary, and analyst recommendations. The OptionsHouse provides customizable options chains, technical studies, and advanced charting. Investors who execute 30+ trades per month or have a balance above $250,000 have access to E-Trade Pro. This idea-generating platform provides a strategy scanner and back-testing. 30 trades per month are too expensive for many investors or don’t fit their trading style. In that case, they are out of luck with E-Trade Pro.
Account Minimum
$500 ($0 for IRAs)
Customer Service
E-Trade investment pros are available 24/7/365 by phone, email, or online.
Pros
Cons
The Verdict
Folio Investing hit a home run with its folio-based investment platform. Most individual investors struggle to create a truly balanced portfolio. Buying a mutual fund or an ETF provides some diversification but not enough. Funds diversify in terms of industries or certain markets, but that still leaves the portfolio out of balance. This magnifies losses and results in missed opportunities.
The folios allow investors to own multiple stocks, mutual funds, and ETFs in one folio. All folios provide the level of diversification once reserved for the super wealthy or pension funds. The fractional share model means the folio can be purchased with no minimum cost. Investors of modest means can own the same positions as the big shots.
With 160 folios to choose from, investors are assured to find a fit for their age, risk tolerance, and investing style. Folio Investing offers a product that protects investors’ principals while offering the opportunity for substantial returns. Active investors can buy their choice of individual stocks while holding mutual funds and ETFs in their folios to provide diversification. This is the ideal setup for most individual investors. For that reason, we give Folio Investing 5 stars.
