Folio Investing Review - Portfolio Building Simplified with Small Costs

Folio Investing Review

Before there were “robo-advisors,” there was Folio Investing. As a pioneer in several online investing products that long-standing brokerages have since adopted, Folio Investing has established a solid online presence since they launched in 2000.

If you have been looking for a DIY alternative to a traditional brokerage that still allows you to invest in stocks, bonds, ETFs, and mutual funds with low trading costs, this is it. And, Folio Investing can still automatically handle the administrative side of investing like dividend reinvestments, portfolio rebalancing, and tax-optimized investing.

As you will find out in this Folio Investing Review, traders from nearly any investing strategy can benefit from using one of the many unique investment tools that help make investing personal.


Brief Overview

Folio Investing, subsidiary of Foliofn, Inc, was founded in 2000. They are known for their low trade fees & “Ready to Go” investment portfolios that allow you to invest in customized investment portfolios consisting of up to 100 stocks, ETFs, or mutual funds. Or you can build your own portfolio with these same investment options.

Another positive feature of Folio Investing is the ability to purchase partial (fractional) shares of individual stocks & ETFs. This is truly a rarity in the investment world, as most brokerages only allow you to buy partial shares of mutual funds.

Most trades cost $4 if you belong to their free basic plan or you can trade up to 2,000 times monthly with their $29 monthly plan. These trades are cheap because they are “window trades” that are only executed at 11:00 AM & 2:00 PM Eastern Time. You can also trade market & limit orders for an additional fee.


Who Should Consider Folio Investing

Investors who are looking for the flexibility to build diverse portfolios through low trading fees will be pleased with Folio Investing. Especially if the idea of buying fractional stock & ETF shares is appealing. And, they offer 160+ pre-made “Ready to Go” portfolios that make investing simple.

The ideal Folio Investor customer will already have some investing knowledge and makes at least 2 trades per month. You need to make at least 4 per quarter to avoid the $15 inactivity fee.

Beginner investors that need lots of guidance or help from a human advisor & active day traders that don’t like window trading or want to invest in stock market alternatives like forex or penny stocks will need to consider a different brokerage.


Likes & Dislikes

Likes

Dislikes

  • Most trades are $4 or less & execute twice daily
  • Get 2,000 commission free monthly trades with the $29/month Unlimited Plan
  • Trade fractional shares of stocks & ETFS, not just mutual funds
  • Invest in common stocks, bonds, mutual funds, and ETFs
  • Can invest in 160+ Ready to Go (RTG) Folios
  • Can create your own custom portfolio
  • Use their Tax Football software to minimize your tax burden
  • $15 Inactivity Fee if you make three or fewer trades per quarter
  • Additional fee for market, limit, & stop orders
  • No mobile app
  • Limited education materials for beginner investors

Investment Offerings

You can trade nearly any stock, bond, ETF, or mutual fund in whole shares or fractional shares.

In general, Folio Investing doesn’t support OTC, pink sheet, bulletin board, or debt securities trades. Select clients can even invest in private companies using their Folio Institutional service.

The keystone investment offering of Folio Investing is their Ready-to-Go (RTG) folios or the ability to create your own unique investment folio. There are 160+ RTG folios that you can invest in with no minimum initial investment. These folios can consist of all stocks, all bonds, all ETFS or mutual funds, or a combination of several investment vehicles.

folios

Ready-to-Go folios also have certain investment strategies such as Target Date Retirement Funds, Market Index Funds, or specific industries and geographic regions.

Basically, there’s most likely an RTG folio for nearly any mutual fund or ETF investment strategy.

For most investors, Folio will provide all the investment options you need. And, the ability to buy fractional shares makes expensive stocks affordable.

If you want to trade options, penny stocks, or other alternative investments, you will need to go elsewhere.

The ability to trade fractional shares is a huge selling point. And the Ready-to-Go portfolios are a unique & cost-effective alternative to ETFs and mutual funds.


Fees

Folio Investing’s fee schedule is pretty reasonable. There are no account minimums or order minimums (except for a few mutual funds), but, you will be charged a $15 quarterly inactivity fee if you make 3 or fewer trades. Two different membership plans exist & the first (free) plan is better if you make 8 trades or less.

There is also a $25 annual fee for all IRA accounts, regardless of which plan you use.

Basic Plan

  • Monthly Subscription Fee: Free
  • Window Trades (11am & 2 pm): $4 per security
  • Market, Limit, Stop, and Stop-Limit Orders: $10 per security

Unlimited Plan

This plan is subscription based. You do get a 60-day free trial which is fairly generous.

  • Monthly Subscription Fee: $29 per month or $290 per year
  • Window Trades (11 am & 2 pm): First 2,000 are free each month. $0.50 per trade afterward.
  • Market, Limit, Stop, and Stop-Limit Orders: $3 per security

The fees are very reasonable. Investors that only make one automated trade per month (i.e. $100 on the 1st of each month) will need to make a second at least one month per quarter to avoid the fee.

Folio Investing’s patented Window trades option is basically another version of dollar-cost averaging.

Whatever a security is selling for at 11 am or 2 pm is basically what you will pay. You might be able to get a better price by doing a market or limit order, but, Folio Investing is focusing more on making investing simple & cheap.


Platform

Usability

Folio Investing only offers a web-based platform that is fairly easy-to-use & rather simple. It doesn’t have all the advanced tools that some other brokerages offer for professional traders, but, you can easily research & execute trades.

Here are a few ways you can easily trade with Folio Investing:

  • Trade securities or RTG folios with shares or dollars on the same screen
  • Patented Tax Football allows you to visually see your potential tax burden with each trade
  • Track potential investments for hypothetical folio performance for free
  • Color-coded guides help you know which you are overweighting (green), underweighting (yellow), or excluding (red) from your custom folios.

Folio Investing is designed to have you easily trade a Ready-to-Go Folio or build your own folio. The platform doesn’t have all the bells & whistles as some other brokerages, but, you still have all the tools you need to execute trades with ease.


Design

Folio Investing’s site is easy to digest. It primarily has a white background with blue & orange buttons. The appearance is very similar to the interfaces of most major brokerages, Charles Schwab & Vanguard immediately come to mind. You can’t move tiles or screens, but, the entire site is easy to navigate.

Your charts & trade screens are in the center of the screen. The filtering options are often to the side or above the charts.

Navigating Folio Investing will be really familiar with the interface you might already use for your company 401k. You will be pleased by their simple & clean design.


Customization Options

Customization is limited with Folio Investing. Mostly you are able to filter funds & investments that don’t meet your search criteria.

However, you can simulate hypothetical tax scenarios with their Tax Football feature and track hypothetical investments.

One unique area for customization is the ability to change your positions for particular investments within a Ready-to-Go portfolio.

You really can’t do much to personalize the Folio Investing platform, but, they do have some good customization options where it counts. Simulating your tax costs & changing your position weighting within portfolios.


Mobile App

One large drawback is there isn’t a mobile app for Folio Investing. This means you can only access Folio Investing from their website.

That might be tough to do on a smartphone screen the size of your hand. There is no word when a mobile app will be released.

If mobile investing apps are important to you, Folio Investing might not be the brokerage for you. Unless you can access it from a regular computer or tablet.


Unique Features

Folio Investing has four unique features that separate them from other brokerages.

Fractional Shares

Many investors with small budgets stick with mutual funds because they can buy partial shares.

With Folio Investing, you can buy fractional shares of stocks and ETFs. This means all your money is invested in the market instead of having some sitting in the bank as cash and earning a very small interest rate.

Tax Football

If you want to minimize your investment taxes, Folio Investing’s Tax Football is a visual graph that can show your tax gains or losses by simulating trades.

The feature has the namesake because it looks like an oval shaped football. The top half is shaded blue and signifies tax gains and the bottom half is shaded red and signals tax losses.

Window Trades

Trades are so cheap on Folio Investing because they execute them twice daily at 11 am & 2 pm Eastern.

This can be a good option if you don’t want to time the market for a potentially better market price or want to pay a very small trade commission.

Customize Ready to Go Portfolios

When you invest in an ETF or mutual fund, only the fund manager can change the investment allocation.

With Ready-to-Go Portfolios, you can invest more, less, or exclude certain stocks. This is another Folio Investing helps give every investor a good balance between DIY investing & getting some basic guidance with broker-created portfolios.

All of these features can help make investing easier, especially the Tax Football if you want to handle the tax harvesting yourself which displays the information in a visual & colorful manner.

For some, the twice daily window trades will be frustrating if they want to do market orders.

You can go to another brokerage and get these trades for $4.95 each. If you only do a few trades per quarter, the extra money in commissions can be worth the tradeoff of having more flexibility.


Trading

Process

Executing trades is pretty easy on Folio Investing. Within a folio, you can enter in either the dollar amount for fractional shares or buy whole shares on the same trade screen. All the folio holdings are listed on the same screen which can make it easy to buy or sell individual securities.

If you want to rebalance your folio yourself, you can also adjust your weightings by percentage. The process is very similar to readjusting your 401k portfolio.

The fractional trading feature makes it trading stocks & ETFs easy for those that want the simplicity of investing in mutual funds, but, want the increased potential returns of trading individual stocks.


Order Filling

Most orders are executed at 11 am and 2 pm and filled shortly afterward. You can also do market, stop, or limit orders at any time for an additional fee and they will be filled when the criteria are met.

Folio Investing clearly states they don’t trade for speed to get the best deal, they try to make trading as simple as possible.

For the average investor, two daily window trades are sufficient.


Charting

Folio Investing has basic charting features. You can compare the performance of a Folio or investment against the historical performance of an index or another Folio or stock. You can also access historical quotes and factor fees into your tracking.

Once again, most likely advanced traders won’t be using Folio Investing so their charting capabilities to track portfolio performance and simulate trades will be acceptable in most instances.


Research

Folio Investing gets its research information from Quotemedia. You can get basic quote information or detailed reports including analyst opinions, financial & earnings reports, and historical quotes.

Their research platform leans toward the basic end but it is still more in-depth than some other discount brokers that might only provide basic quote information like a 52-week high/low, dividend rate, and a Morningstar rating.

The research platform is sufficient to get started investing with the 160 Ready-to-Go portfolios and to customize your own portfolio.


Educational Materials

There aren’t many educational materials to speak of at Folio Investing. That’s one reason why this platform is recommended for those with some prior investing experience. You won’t have access to a human broker that is a premium service that other brokerages and “robo-advisers” offer.

They do have a basic “Folio Glossary” that gives you dictionary definitions of many common investing terms.

Otherwise, you need to look elsewhere to learn different market and trading strategies.

If you know what Ready-to-Go folios you want to invest in you might not need any educational materials as the folio manager will rebalance the account as necessary.

But, if you plan to build your own folio or customize an RTG, you might need some help beyond Folio Investing’s resources.


Support

Folio Investing has a pretty good help center that is accessible 24/7 on their website. It will walk you through the various steps to execute a trade or use their various features such as the Tax Football or managing your account.

They can also be reached via e-mail. Or, you can call them on weekdays from 7 a.m. to 9 p.m. Eastern and from 8 a.m. to 4 p.m. Eastern on weekends excluding market holidays.

Their customer service window is similar to other discount brokers. It would be nice if they could add a live chat feature, even if only during normal business hours. Their help center will answer most trading and platform questions.


Folio Investing Review Final Verdict

Folio Investing is a good option if you have at least some investing experience and make at least two trades per month to avoid the inactivity fees.

If you want to buy fractional shares of stocks & ETFs, invest in a Ready-to-Go Folio, and are okay with window trading, it’s hard to beat the flexibility and affordability that Folio Investing offers.

Unfortunately, professional traders that need an extensive research platform will be better served elsewhere despite the low trading commissions.

Andrew
 

My name is Andrew and I run Slick Bucks to help folks learn to manage money cleverly, and how that clever management can make you wealthier.

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