Folio Investing Review

Advisors, Brokers, Investing
Folio Investing Review

The Internet has fundamentally altered the world of investing. What was once reserved for people who hired a broker is now open to anyone with a computer and a few hundred dollars.

This new era of investing has seen a wave of companies offering their own unique spin on money management.

Folio Investing is one company attempting to maximize the investment potential of online investors.

From the firm’s website: “Folio Investing provides a powerful platform for diversified investing and portfolio management, with significant customization, tax and cost management benefits. We enable you to combine the benefits of mutual fund investing and the benefits of owning individual stocks, with no minimums.”

As a subsidiary of FOLIOfn, a broker that opened its doors in 1999, Folio Investing is one of the more established firms among Internet brokages.

Folio Investing focuses on helping its customers build diversified portfolios. The firm offers more than 160 Ready-to-Go Folios, with something for every investor, whether you’re interested in a target date folio, low volatility, broad market exposure or some other investment strategy. When Folio Investing revises or rebalances their portfolios, investors receive an email alert, allowing individual investors to closely monitor their investments.

Investors also have the option of building their own portfolios, mixing stocks, ETFs, and mutual funds as they choose. Investors can split accounts between Ready-to-Go Folios and custom-built folios.  Folios can include fractional shares, allowing small-scale investors access to stocks that might otherwise be out of reach. How much control an investor exerts is entirely up to that investor’s comfort level. Tinker with your own custom folio daily, allow one of Folio’s Ready-to-Go products to work for you, or go anywhere in between.

Pricing

Folio Investing offers a flat-fee pricing option. For $29 a month, an investor can make as many trades as he or she can imagine. For investors who like to play with their holdings frequently, this pricing model can save a lot of money — if they have a portfolio large enough. For a $25,000 portfolio, for example, that $29 monthly fee works out to a 1.4% annual charge.

Folio also offers commission-based pricing, charging $4 per transaction. This plan also imposes a quarterly fee of $15 if you have made three or fewer trades in the preceding quarter. IRAs cost an additional $25 a year.

Products and benefits

  • Available for retirement accounts, such as IRAs
  • More than 160 Ready-to-Go Folios designed for almost any investment strategy
  • Custom, build-it-yourself folios, specially suited to your individual interests
  • Fractional share investing
  • Rebalancing alerts that keep you in the loop
  • Tax management tools to help minimize your tax liability
  • The option to test a folio’s performance at no charge until you fund it
  • No minimum account balance
  • No minimum or maximum limits on trades

Folio Investing vs. competitors

Folio Investing, having started as FOLIOfn before the turn of the millennium, has longevity in its field. More recent entrants into online portfolio-based investments include companies like Motif Investing, founded in 2010, and Betterment, founded in 2008. Folio has advantages of age and experience over these newer companies.

Like Folio, both Motif and Betterment offer fractional investing, portfolio rebalancing, and a variety of ETFs to choose from. Motif has established portfolios for a variety of investment strategies, including the classic target date and asset allocation strategies. It also offers funds grouped by common themes (aka “motifs,” hence the name). Betterment has a smaller variety of funds to choose from and bills itself as ideal for “set it and forget it” investors. Motif allows more personalization, more like Folio Investing.

Both Motif and Betterment might be better options for very small investors based on their fee structure. Motif operates on a $9.95 commission per “Motif” (or portfolio), with no additional fees. Betterment charges a quarterly fee of 0.15% and 0.35%, depending on your balance.

Should you invest with Folio?

If your mutual fund portfolio is small (under $10,000 or so) and you trade infrequently, the unlimited plan fee will cost you more than the fees at a traditional mutual fund.

However, if your portfolio is larger than $25,000, and especially if you trade at least three times per month, Folio’s unlimited transaction $29 monthly fee might well be the best deal you will find.

Ready to sign up? Learn how to get started with Folio Investing here.