Do you want to invest money safely, but without doing any or a lot of grunt work? There are plenty of online investment service options that you can try. We have put together a brief but power-packed summary on the best online investment service out there, one that will cater to your needs.
Without further ado, here is where you can invest your money safely, with the best possible chance of earning a decent return without doing heavy grunt and spade work that usually entails a self-investing endeavor.
Before we get started, please note that “Robotic” in the following passages means that a complex algorithm will decide how and where to invest your money.
Minimum required to invest : $500
Investment management type : Robotic (Algorithm)
Fee : Free for investments up to $10,000, 0.25% on assets beyond $10,000
Wealthfront has some pretty serious brains behind its algorithm. Designed by a Princeton professor who has served on the President’s Council of Economic Advisers, Wealthfront focuses on low cost investing.
With incredibly low fees and actually no fees for investments up to $10,000, Wealthfront also offers the dual edge of tax-loss harvesting. If you do lose money on your Wealthfront portfolio, the algorithm is designed to make your portfolio take a loss and then use those losses to set them off against your taxes, thereby giving you the best chance of making a positive return on your total portfolio.
Wealthfront is a fantastic choice if you have less than $10,000 to invest, as you can invest without paying any fees and invest via a sound investing model. Even with an investing capital of over $10,000 that will require a fee, Wealthfront offers tremendous tax saving benefits that will allow you to earn a higher net return than when you choose to invest yourself, or use another investment service that doesn’t leverage tax-loss application.
Minimum required to invest : $100,000
Investment Management Type: Expert Investment Analysis Team
Fee : 0.40% Annual fee for $100,000 Minimum Investment. 0.50% for $250,000+
Betterment is the right choice of online investment service if you are a one of the big boys when it comes to investment clients, meaning you have more than $100,000 to invest.
Betterment is headed and led by a team of Ivy League educated and licensed experts. The only fee involved is an annual fee. Therefore, you are free to trade and withdraw without paying additional fees. You can use your existing 401k account, savings or joint accounts or a taxable account to bring your balance up to the $100,000 minimum that is required to do business with Betterment.
Betterment, like Wealthfront, also gives you the benefit of tax-loss harvesting. This will ensure that you get tax benefits even if a part of your portfolio doesn’t do so well with returns. Tax loss harvesting is generally a service that is sold on a standalone basis, costing you extra money that will eat into your investment returns. Both Wealthfront and Betterment give this to you as a complimentary service.
From 2004 to 2016, Betterment claims that its average portfolio with a 70%+ stock mix earned a total return of 114.2%, compared to just 69.1% that portfolios with 60-80% stock exposure earned by the average private investor.
Betterment made investments have exposure to emerging markets which means that your dependency on one economy, developed or not, is substantially reduced.
Clients with a minimum of $100,000 have the option to choose their target allocation to stocks and bonds and also have the right to an annual call with the investment team at Betterment. $250,000+ investors have the benefit of unlimited calls with Betterment’s team of CFP professionals, all year round.
If you have the big bucks to invest and want a low cost, expertly managed online investment service, Betterment is clearly the top choice, with a proven track record.
Minimum required to invest : Any amount
Investment Management Type: Robotic (Algorithm)
Fee : 0.25% a year for $5,000+ accounts. $1 a month for accounts <$5,000
Fee : Completely free for people less than 24 years of age or for students
If you are a student and have the rare ability or interest to invest so early in your life, Acorns is a fantastic choice as it is completely free, at least until you graduate or turn 25, whichever happens earlier.
It is also an app friendly online investment service meaning that you have complete control and scrutiny over your investments, in your hand, via your phone. What is cool about Acorns is that it allows you to add to your investment capital in a myriad of ways. For starters, you can link your credit or debit cards and Acorns will give you the the option to round off all your purchases to the next dollar, and invest that amount. So, for instance, let’s say you spend $8.37 on a burger, Acorns will, if you set it to, take $9.00 – $8.37 = $0.63 and add it to your investment capital.
Many wise investors urge youngsters to make purchases only when they can afford to put aside 10% of their purchase amount as an investment. In the above example, Acorns taking $0.67 is almost the equivalent of 7.5% of your purchase amount. It won’t always work out that way but is a neat little way to put aside more for investment and saving, without feeling the pinch of large cash outflows.
Of course, Acorns allows you to add money in the traditional way as well, by making monthly manual or automatic contributions to your account.
To get started with Acorns, all you need to do is download its official app, ,ink your bank account, credit cards or debit cards and then answer a questionnaire and get going! Every dollar you invest through Acorns is typically invested in more than 7,000 stocks and bonds, meaning that you get maximum diversification.
You get 5 different pre-set portfolios to choose from. The conservative portfolio has a 29% exposure to stocks, 60% exposure to bonds and 11% exposure to real estate stocks. The aggressive portfolio has a 59% exposure to stocks, 11% exposure to bonds and 30% exposure to real estate stocks.
The algorithm that powers Acorns was developed by Dr. Harry Markowitz, a Nobel Prize winning economist. You know there’s some good thinking behind your investment strategies when you invest through Acorns. It obviously isn’t a guarantee that you will never lose money, but is a way to invest money with minimal risk.
Acorns is available both at the App store and the Google Play store and currently has close to 1.5 Million active investors through its app platform.
Aside from the above best online investment services, you also have the old faithful in Vanguard. Vanguard allows you to choose a basket of mutual funds to create your own portfolio and is generally recommended for a hands-on investor who knows how to pick funds that will make up his or her portfolio, needing only an easy to use platform to do so.
Let us know if this post on choosing the best online investment service helped you, at least in some small way if not as an eye opener. Please also let us know of recommendations or suggestions of your own and we will include them here, after a review of course!