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As a small investor (investing around few thousand USD), how do I know which app to trust? There is Robinhood and Stash for ETFs and Stocks and then there are r

by shanxS 7y ago

As a small investor (investing around few thousand USD), how do I know which app to trust? There is Robinhood and Stash for ETFs and Stocks and then there are robot-wealth mangers like WealthFront etc. Should I always stick to big firms like Vanguard or Fidelity? Thing I don't like about firms like Vanguard and Fidelity is that you cannot buy fraction of a unit which Robinhood/Stash allow you to do. Any advice?

_bxg1 7y ago
I've been very happy with Betterment (one of the first "robo-advisors", as far as I know). I'm not aware of any options for manually trading through it (not that I really want to mess with that anyway), but for automatic-management the feature set/apps/fees all seem really good.
a-wu 7y ago
Fidelity offers fractional shares now: https://www.fidelity.com/trading/fractional-shares https://www.fidelity.com/trading/fractional-shares
- shanxS 7y ago
  Oh Great! thank you!
smeyer 7y ago
Haven't both Vanguard and Fidelity started supporting fractional shares? E.g. https://www.fidelity.com/trading/fractional-shares https://www.fidelity.com/trading/fractional-shares
- jermaustin1 7y ago
  I know Vanguard does on Vanguard ETFs and MFs when you have dividend reinvest on, but I don't know about other scenarios.
- atombender 7y ago
  M1 is the only one that has full support for fractional share trading, I believe. Fidelity has started to offer fractional shares, but it has some limitations: Only market and limit orders, only trades through the basic trade ticket in the mobile app, limited to NYSE/NASDAQ stocks, etc. [1] Another thing to watch out for is that fractional shares can't be transferred; they must be liquidated if you want to switch brokers. Schwab has said they'll be launching fractional shares over the summer. Note that most brokers already support fractional shares indirectly through DRIP [2], but that's unrelated to trading. [1] https://www.fidelity.com/trading/fractional-shares https://www.fidelity.com/trading/fractional-shares [2] https://www.investopedia.com/terms/d/dividendreinvestmentplan.asp https://www.investopedia.com/terms/d/dividendreinvestmentpla...
  - gnicholas 7y ago
    > Another thing to watch out for is that fractional shares can't be transferred; they must be liquidated if you want to switch brokers. What happens if I buy .5 shares of AAPL every week for 53 weeks? Do I have 26 undivided shares that can be transferred and one half-share that has to be liquidated, or do they treat it as 53 half-shares that all must be liquidated? If the latter, seems like a great way to keep people locked-in. But the former could be a headache for basis reporting, especially if you could transfer to a brokerage that doesn't natively support fractional shares.
    - atombender 7y ago
      I don't know for sure, but I'm pretty sure they're combined behind the scenes. Fractional shares are really abstractions over an underlying instrument. The broker is the actual owner of the shares, and you have an indirect ownership. Among other things, it leads to a situation where you cannot take part of normal shareholder activites such as voting. The broker still needs to keeps records of the cost basis of each fraction you purchased, of course.
      - ipqk 7y ago
        This is generally true of whole shares too – that the brokerage technically owns the shares. And why brokerages will set up proxy voting for shareholder activities.
zymhan 7y ago
I recommend Vanguard for their very low overhead and fees. I am a customer of theirs and Robinhood, and Vanguard's relative conservatism is a huge plus when you're investing a lot of money.
reverend_gonzo 7y ago
Interactive Brokers is a professional brokerage that has a free tier now and just added fractional shares as well. Vanguard, Fidelity, Schwab, TD Ameritrade are all legitimate operations as well, but IB is what professionals use.
- ZeroCool2u 7y ago
  Yes, IB is what I use too. Their paid individual account tier is only $10 a month and provides SDK's with robust support for Python, Java, and C++.
  - e-clinton 7y ago
    Does their paid tier include free options trading? That’s what’s attractive about Robinhood, but they cost me $7k on Monday so I’m dumping them.
    - ZeroCool2u 7y ago
      Only US Exchange-Listed Stocks / ETFs are commission free.[1] Honestly though, the commissions are extremely low. Definitely lower than that $7k. Just keep in mind, you get what you pay for. [1] https://www.interactivebrokers.com/en/index.php?f=45500 https://www.interactivebrokers.com/en/index.php?f=45500
    - reverend_gonzo 7y ago
      Their fees are something like 10 cents if you’re trading an option. Completely irrelevant.
PascLeRasc 7y ago
I'm very very happy with Wealthfront. They make automatic investing incredibly simple and explain every step of choosing your risk tolerance. I've used Robinhood extensively and I think it's just too much work and invites you to be too active/reactionary.
WrtCdEvrydy 7y ago
I'm an M1 finance guy, but that might not be good enough for most people.
LatteLazy 7y ago
As a small investor, you don't want individual shares, let alone fractional ones. Stick to vanguard and their excellent etfs. Don't try to time markets, if they're down, trade tomorrow or next week. Pretty much anything else is just gambling.

by shanxS 7y ago

_bxg1 7y ago

I've been very happy with Betterment (one of the first "robo-advisors", as far as I know). I'm not aware of any options for manually trading through it (not that I really want to mess with that anyway), but for automatic-management the feature set/apps/fees all seem really good.

a-wu 7y ago

Fidelity offers fractional shares now: https://www.fidelity.com/trading/fractional-shares https://www.fidelity.com/trading/fractional-shares

shanxS 7y ago
Oh Great! thank you!

smeyer 7y ago

Haven't both Vanguard and Fidelity started supporting fractional shares? E.g. https://www.fidelity.com/trading/fractional-shares https://www.fidelity.com/trading/fractional-shares

jermaustin1 7y ago
I know Vanguard does on Vanguard ETFs and MFs when you have dividend reinvest on, but I don't know about other scenarios.
atombender 7y ago
M1 is the only one that has full support for fractional share trading, I believe. Fidelity has started to offer fractional shares, but it has some limitations: Only market and limit orders, only trades through the basic trade ticket in the mobile app, limited to NYSE/NASDAQ stocks, etc. [1] Another thing to watch out for is that fractional shares can't be transferred; they must be liquidated if you want to switch brokers. Schwab has said they'll be launching fractional shares over the summer. Note that most brokers already support fractional shares indirectly through DRIP [2], but that's unrelated to trading. [1] https://www.fidelity.com/trading/fractional-shares https://www.fidelity.com/trading/fractional-shares [2] https://www.investopedia.com/terms/d/dividendreinvestmentplan.asp https://www.investopedia.com/terms/d/dividendreinvestmentpla...
- gnicholas 7y ago
  > Another thing to watch out for is that fractional shares can't be transferred; they must be liquidated if you want to switch brokers. What happens if I buy .5 shares of AAPL every week for 53 weeks? Do I have 26 undivided shares that can be transferred and one half-share that has to be liquidated, or do they treat it as 53 half-shares that all must be liquidated? If the latter, seems like a great way to keep people locked-in. But the former could be a headache for basis reporting, especially if you could transfer to a brokerage that doesn't natively support fractional shares.
  - atombender 7y ago
    I don't know for sure, but I'm pretty sure they're combined behind the scenes. Fractional shares are really abstractions over an underlying instrument. The broker is the actual owner of the shares, and you have an indirect ownership. Among other things, it leads to a situation where you cannot take part of normal shareholder activites such as voting. The broker still needs to keeps records of the cost basis of each fraction you purchased, of course.
    - ipqk 7y ago
      This is generally true of whole shares too – that the brokerage technically owns the shares. And why brokerages will set up proxy voting for shareholder activities.

zymhan 7y ago

I recommend Vanguard for their very low overhead and fees. I am a customer of theirs and Robinhood, and Vanguard's relative conservatism is a huge plus when you're investing a lot of money.

reverend_gonzo 7y ago

Interactive Brokers is a professional brokerage that has a free tier now and just added fractional shares as well. Vanguard, Fidelity, Schwab, TD Ameritrade are all legitimate operations as well, but IB is what professionals use.

ZeroCool2u 7y ago
Yes, IB is what I use too. Their paid individual account tier is only $10 a month and provides SDK's with robust support for Python, Java, and C++.
- e-clinton 7y ago
  Does their paid tier include free options trading? That’s what’s attractive about Robinhood, but they cost me $7k on Monday so I’m dumping them.
  - ZeroCool2u 7y ago
    Only US Exchange-Listed Stocks / ETFs are commission free.[1] Honestly though, the commissions are extremely low. Definitely lower than that $7k. Just keep in mind, you get what you pay for. [1] https://www.interactivebrokers.com/en/index.php?f=45500 https://www.interactivebrokers.com/en/index.php?f=45500
  - reverend_gonzo 7y ago
    Their fees are something like 10 cents if you’re trading an option. Completely irrelevant.

PascLeRasc 7y ago

I'm very very happy with Wealthfront. They make automatic investing incredibly simple and explain every step of choosing your risk tolerance. I've used Robinhood extensively and I think it's just too much work and invites you to be too active/reactionary.

WrtCdEvrydy 7y ago

I'm an M1 finance guy, but that might not be good enough for most people.

LatteLazy 7y ago

As a small investor, you don't want individual shares, let alone fractional ones. Stick to vanguard and their excellent etfs. Don't try to time markets, if they're down, trade tomorrow or next week. Pretty much anything else is just gambling.