If you want to be a do-it-yourself investor but are looking for a second opinion, MarketRiders is a great way to gather information quickly and make smarter investment decisions. With a flat annual fee, this software offers professional advice to people who are trying to get the most out of their investments.
What is MarketRiders?
MarketRiders, founded by CEO Mitch Tuchman, is easy-to-use software that recommends the best portfolio allocation for different investors based on their goals, risk appetite, assets and age using a comprehensive algorithm. The program provides users with specific and actionable advice about how to minimize fees and create a diversified portfolio with ETFs. Rather than directly managing your investments, it gives you the freedom to make trades yourself.
MarketRiders’ algorithms put to use the ideas of prominent investors David Swensen, John Bogle, Burton Malkiel and Dr. William Sharpe, with the aim of helping you invest like an expert while educating you along the way.
How MarketRiders helps consumers avoid fees
Because MarketRiders suggests investing solely in ETFs with an average expense ratio of 0.19%, rather than actively managed mutual funds, which can charge up to 6 to 10 times more and eat up more of your savings, clients are able to save more.
With MarketRiders’ flat $149.95 annual or $14.95 monthly fee—less costly than hiring a personal investment advisor—consumers with larger nest eggs can avoid paying a percentage of their assets in fees.
How MarketRiders works
It takes about an hour to set up an account through MarketRiders and adjust your investments to match its recommendations. You can start off by choosing to build your own portfolio or letting the program build it for you. If you choose the latter, the application will ask you about your assets, investing experience, age, risk appetite and goals.
After gathering some basic information, MarketRiders will suggest which ETFs to buy. Periodically, when your portfolio strays from your original allocation, MarketRiders will notify you by email and advise what you can buy and sell to rebalance your account.
Since you can manage up to 10 portfolios with a single subscription, this program can also accommodate users with more complicated investing needs.
According to a Pricemetrix study, the average fee-based advisor charged clients 0.99% of assets in 2013, making MarketRiders a much more affordable option for people with larger assets.
MarketRiders isn’t for everyone, though; if you have a portfolio under $25,000, the company recommends building a commission-free ETF account through a discount broker instead for greater cost efficiency.
MarketRiders vs. SigFig vs. Betterment
For consumers who want to take charge of their own investments, a MarketRiders subscription is a smart buy. If you want someone else to do the trading, however, the automated investment management services at SigFig and Betterment could also be attractive options. Here’s how these programs compare:
MarketRiders, SigFig and Betterment all make use of modern portfolio theory, prioritizing diversification, low fees and steady returns through ETFs.
When it comes to goals, both MarketRiders and Betterment prompt users to define certain time horizons and objectives in their portfolios and assign allocations accordingly.
MarketRiders, SigFig and Betterment all compare your optimal fund allocation against your actual fund allocation (based on withdrawals, deposits and performance) and tell you how to rebalance your portfolio so that you earn more in the long run.
MarketRiders tracks your account activity and alerts you whenever your allocation strays from the original allocation, usually two to four times a year. To make the process easier, they also send you a list of ETFs to buy and sell whenever you’re making a withdrawal or deposit so that your account will stay balanced. Betterment rebalances your portfolio whenever you make a deposit or whenever your assets are more than 5% off the original allocation, while SigFig rebalances accounts when they’re off by a few percentage points.
When you’re using MarketRiders, you have control over your investments and are able to make adjustments at any time. To get advice on how to go about investing more aggressively or conservatively, simply adjust the risk settings and time horizon on the account you want to make changes to, and the program will suggest a different allocation. Because you have the final say in which advice you use and don’t use, you don’t have to worry about transactions going on in your account without your knowledge.
Betterment and SigFig allow clients to make adjustments to their risk profiles through online dashboards as well, but don’t allow them to actually make trades. This limitation might be frustrating for more experienced investors.
Betterment charges 0.15% to 0.35% of your managed assets for their yearly fee, depending on the size of your assets, while SigFig charges $10 per month. Since Betterment requires no minimum investment and SigFig requires a minimum of only $2,000, these services could be useful for investors who are just starting out and don’t have a lot of assets.
MarketRiders, in contrast, charges $14.95 per month or $149.95 per year and suggests a minimum investment of $25,000, making it a more affordable option for people with larger nest eggs and more complicated investment needs.
Is it worth it?
People who don’t want to spend a lot of extra time learning about different investments may find it easier to manage their finances through an automated investment management service. However, if you prefer managing your own investments but are looking for a way to validate your decisions and learn more about strategy, MarketRiders is a more useful option. Its affordable and customizable investment advice allows you to stay in complete control of your finances while helping you earn more.