How does one invest in stocks, ETFs or mutual funds? Most folks use well known brokers like Schwab, Fidelity, Vanguard, TD Ameritrade etc. Most of these brokers offer commission free ETFs / mutual funds and charge commissions on ETFs or mutual funds not in the commission free list.
So for a buy and hold, dollar cost averaging investor, they have a couple options:
- Invest in the commission free ETFs and/or mutual funds.
- Pay commission on each trade (on funds not in the commission free list).
What if your portfolio has say 10 ETFs you want to invest in on a regular basis?
You are left with no choice but to create those individual orders manually.
Furthermore, what if you only have enough money to buy fractional shares? Well, you are out of luck because none of these big firms offer buying fractional shares in a regular brokerage account (as of 9/13/2018).
In summary, these traditional big firms lack any sort of self selected portfolios that allow automated investing on a regular basis and can buy fractional shares. Of course, there are a lot of robo advisors out there that charge anywhere from 0.25% to 0.75% on your investments with the notable exception of WiseBanyan (more on this in another blog post). With robo advisors, you are paying for them selecting a portfolio and a premium at that. For example: below is a table provided courtesy Value Penguin
And there are target date funds which people are pulling into for numerous reasons (covered in a separate post). But these target date funds themselves cost on an average 0.66% in 2017, according to a report by Morningstar, an outstanding source of independent research on mutual funds. (That's a big price to pay which can be avoided with a little bit of self education)
But, what if there was a way for one to create a:
- self directed portfolio of ETF / stocks,
- that you can buy fractional or full shares of
- on an automated basis
- commission free?
And I am here to say, yes there is. It's called M1 Finance.
In M1 Finance, you can:
- create your own pie / portfolio OR
- select from a list of curated ones,
- select x amount of dollars,
- set up a schedule and off you go.
On the set schedule, your monies will be invested by 1230 pm central.
Sit back, relax, sip your cup of coffee and watch your money grow.