Investing Sites, Tools, Recommendations

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At one time I was a registered financial advisor. Basically it was a glorified sales job and I am the world's worse salesperson. I tend to be honest and never quite found the balance between personal profit motivation over being extremely clear on what is being sold. I gave the downsides without giving the upsides enough weight. 

However, I still invest. I'm mostly on the ETF bandwagon at this point although, if you have a little bit of play money, it isn't a bad thing to experiment.

If you're not into investing and want to put some money into the market much like you would do with a workplace retirement account, I suggest Betterment. You sign up, set up a goal, define how much risk tolerance you have and then start putting money into the goal. Betterment does the rest - it picks the funds and weights based on the goal you've set. If you want to override the allocations, you have some additional control. It does cost .25% on top of ETF fees but that includes everything for rebalancing and tax harvesting. There are many similar services but Betterment is the one I've used the most and do recommend.

The next step up is where you want a bit more control and hands-on management. For this I use M1 Finance. Anything Betterment has built can be built in M1. However, you need to build the portfolio (they call a PIE) which is little more than picking the same ETFs and setting the percentage of the PIE it will be. Then you set funding for it and away you go. You can create more custom pies or use some of their pre-built pies. You can stack multiple pies together. 

The downside to M1 is two-fold

  1. They frequently get lambasted for their support on Reddit and other sites. Most people seem to think support stinks. I have not had any interactions so I can not provide any worthwhile observations.  However, most issues seem to relate on how....
  2. ...The site and pie usage can be confusing.

Your main portfolio is basically a pie. You can then add additional pies to the portfolio. You set a percentage of investments between the pies (or individual stocks). At the highest level, you have a rebalance option you can manually trigger. If you included a pie (with other underlying investments) that pie has the investment in it divvied up in the same way. The underlying pie can also be rebalanced manually.

One thing to note is that as you invest money, your money is spread by the percentages you have set. If you have a regular investment schedule, your funds will tend to keep your portfolio balanced as more goes to investments that that are down (and less to those that are up). If your stocks move quite a bit, you might need to rebalance which brings me to...

Let's say you want to do a pie with dividend investing. The idea is that you can either take the dividends or reinvest them (I'll talk more about dividend investing in another post). The conundrum then is that your dividends are reinvested into your entire portfolio. If it just one pie, not a huge deal. But if you were trying to segregate pies to try different ideas, your dividend pie might start feeding your low-dividend strategy in a different pie.

Again, you can do everything in M1 that you can do in Betterment in terms of investment portfolios. The key difference is that you have to do it yourself and stay on top of managing the portfolio over its life.  It is also cheaper - you only pay for the underlying ETF fees (no advisory fees).

And then there's Robinhood. It is like the DVD bin at Walmart brokerage. No trading fees, fractional shares and options. You can blow your leg off. But, if you only want to buy a handful of stocks or try out basic option strategies, Robinhood is... ok. Again, this is all self-management. Know the risks going in and you should be ok. You'll have access to a load of ETFs from which you can build the same portfolios you have in Betterment and M1. You have much more finite control but you're going to need to do a lot of footwork if you're trying multiple strategies in the same portfolio. 

One tool I recommend greatly is Portfolio Visualizer. If you get an idea for a strategy, you can use the free tier to backtest and optimize your portfolio. It will require some learning - specifically understanding risks and various ways to manage it to really appreciate the value - but there's a ton of data and features available. The paid tiers extend the features quite a bit as well. Definitely worth a look.

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