Folio Investing Review: How Well Does It Work?
The birth of the Internet was a big event. No one knew exactly how big until the worldwide web began to change the social, economic and financial foundations the world depended on for more than two centuries. In a matter of a few short years, established buying habits changed, businesses became international corporations, and banks became the invisible rocks of finance. Investing with a broker wasn’t a phone call away anymore. It was a click away. This article reviews Folio Investing. Folio Investing is an investment company that found a way for people to invest their money online. The Internet is the invisible broker, and Folio Investing’s door is wide open for trades without talking to anyone.
What Is Folio Investing?
The past is a graveyard filled with investment fads. Investing in stocks and other assets is a high-stake legitimate gambling game. Before the Internet, trading stocks was an expensive hassle. People needed a broker. The broker made the deal and charged a commission. Paying the right price meant searching through an investment paper or watching a cable news channel. Average people didn’t play the investment game, but when the Internet introduced itself, people suddenly had investment opportunities that didn’t require all the hassle.
Investors were able to get instant stock prices and cheaper commissions. Day trading became popular. Some people made a lot of money trading on the Internet every day. Internet investment companies popped up like weeds on the first day of spring. Big corporations found a way to take advantage of the dot-com bubble. The latest gadgets from tech companies became investment gold, and oil and gold stocks became the kings of the fickle.
Fix and flip real estate was in vogue and cute investment strategies caught the eye of “get rich quick” investors. Most of those investment fads fizzled away after the 2008 financial meltdown. Wall Street needed new blood to create new investment gimmicks, but one Wall Street executive figured out what the next big investment rage would be nine years before the big meltdown.
Steven Wallman founded Foliofn Investing, in 1998. Wallman is a former commissioner of the Securities Exchange Commission. Foliofn hired employees in 1999, and the company went live in 2000. Moreover, this company enables clients to combine the benefits of mutual funds with the benefits of owning individual stocks with no minimums. Foliofn Investing became Folio Investing a few years later. Folio Investing helps clients build their own diversified investment portfolios for a monthly fee.
How Does Folio Investing Work?
Folio Investing offers more than 160 Ready-to-Go Folios for their diversified client base. Investors that have an interest in a target date portfolio or a broad market exposure with low volatility portfolio pay a monthly fee to design and monitor their investments. The company sends out email alerts when portfolios are updated or rebalanced. Investors can build their own portfolio using stocks, mutual funds, and EFTs.
Investors can customize their portfolio or use one of Folio Investing’s Ready-to-Go portfolios. Investor portfolios can include fractional shares, and that allows small-scale investors to invest in stocks that are out of reach because of their value. Investors have total control of their portfolio, or they can ask for help.
Folio Investing’s technology platform is built on percentages. The platform is similar to a 401 (k) platform. Investors create their folio, and they subscribe one or more of accounts to that folio. The Folio Investing technology platform does all the calculations. After a few clicks, investors are vested, and they have a functioning portfolio.
For $29 a month, investors can make as many trades as they like. But there is also a commission-based pricing option. The commission is $4 a trade, but there is a $15 quarterly fee if you make less than three trades in the previous quarter. An IRA portfolio costs $25 a year.
Benefits And Products
Folio Investing offers no minimum balance accounts and retirement accounts. And there are no minimum or maximum limits on trades. There are more than 160 Ready-to-Go folios for almost any investment strategy. And the fractional share investing option means investors can own a small piece of Apple stock and buy another small piece later. There is a tax management tool that helps minimize tax liability, and there is an option to test a folio’s performance at no charge until one funds the foal.
Folio Investing vs. Competitors
Folio Investing has longevity in the Internet investment space. Most competitors got into portfolio-based investments several years after Folio Investing. Competitors offer similar products and benefits, but Folio has an established reputation, especially for investors that own a portfolio of $25,000 or more. Two competitors, Motif, and Betterment have better fee structures for very small investors.
Folio and its competitors don’t offer refund policies, but there are situations that develop that warrant a refund. Folio Investing is popular due to its quality customer service department. Other competitors like Aberdeen Asset Management, Manulife Retirement, and ETrade.com and a few other investment firms also offer portfolio investment strategies. But Folio Investing stands tall in the Internet portfolio investment game.
The big Wall Street firms aren’t losing sleep or investors because of the growth of Folio Investing and its competitors. Do-it-yourself investing is not for everyone. But there is a growing market for the online service, especially among Millennials. Millennials belong to the tech-savvy generation.
Most Millennials are still paying off huge education debt, so there is little money left to invest. Folio Investing works for Millennials because they can buy one-tenth of a share of a major tech company or another company that is just coming on the scene.
The baby boomers are not as receptive to online investing because many boomers lack the tech knowledge to keep up with their investments. But for people that want to control their investment destiny, Folio Investing is a good alternative. Folio’s platform allows for collaboration with others. Investors know collaboration is an important ingredient in making money.