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Update 8/3/18: Fidelity now has the cheapest fees and NO minimums to start investing. Check out my full write-up!
A couple weeks ago, I wrote about Acorns, an app I think is a great place to get started with investing (especially for millennials). Talking about investing is dicey. For one, because it’s personal (duh). For that reason, everyone has an opinion on it. And that’s where the confusion starts.
My view is: it doesn’t matter where you begin, so long as you do. You can always switch things around later. To that end, I feel Acorns has the most approachable interface for a beginner “despite” costing $1 a month. And there’s no minimum to start investing.
That said, it’s an app and doesn’t let you choose your own funds (you pick from their portfolios). Same with Stash, Wealthsimple, and Betterment. Of course, you’ll get the best deal with a self-directed account – but the minimums are dauntingly high for a beginner, with the exception of TD Ameritrade.
I’ll compare these companies for expenses, account and fund minimums, and quirky extras:
In This Post
8 Best IRA Accounts Compared
Expert-level: Fidelity, Vanguard, Schwab (Options 1, 2, and 3)
I am admittedly a Fidelity fanboy. I’ve reached the point in my investments where I qualify for lower expense ratios of .015% with the FSTVX Total Market index fund. And I put money into my account with the Fidelity Visa here and there. It’s what I like, what I’m used to, and where I started.
Compare that with Vanguard – you need at least $3,000 to start with their funds.
Schwab will waive the $1,000 minimum if you agree to a $100 monthly auto-deposit. And you can begin investing in their SWTSX Total Market index fund with only $1 (but really $100 with the auto-deposit, eh?).
So of the 3, Fidelity is the best place to start. Your money can grow without any fees and you can begin investing with any amount.
TD Ameritrade knocks my socks off (Option 4)
- Link: TD Ameritrade
So I didn’t know this before but… you can start investing with a single buckaroo in the Total Market index fund with the lowest expense ratio (the Schwab fund)!
This is as cheap and simple as it gets. They have a great website, an app, and excellent customer service. So what’s the hitch?
There are many schools of thought on asset allocation and which funds to select. Peeps get anxious about having to choose a fund (or funds). I recommend choosing a Total Market or S&P 500 index fund, and a total bond fund, and calling it a day.
That’s really all there is to it. Stick your money in there and let it sit for 5, 10, or 20+ years. Again, you can always switch things around later. But if you haven’t started yet, you have an out-of-control raging emergency. Start NOW. This or the Fidelity option above are both easy and simple places to begin investing.
Acorns (Option 5)
Here’s my full review of Acorns. This one is the one I recommend.
I was chatting with a friend who said, “Ugh, I hate talking about money. It stresses me out but I knew I needed to invest.”
She chose Acorns. Why?, I asked her. “It was the easiest. It plugs into my debit card. I never have to think about it. And I like their app.”
Fair ’nuff. I love geeking out on index funds, but realize not everyone does. Plus, when I dug into Acorns a little more, I loved their Round-Ups and Found Money features. Really easy ways to save consistently, which is the most important part about investing.
It costs $1 a month which is a high percentage ratio on a “small” account. But also on a practical level… it’s $1 a month. If this is the app that gets you to invest, I’m all for it.
You can get $5 for free to start and your first month free when you sign-up with my link.
They’ll select a balanced portfolio for you after you answer a few questions – that takes the stress and guesswork out of selecting funds. The whole process takes 5 minutes. Please open an IRA today if you don’t already have one (or a 401k). Your future is too important not to save.
Stash (Option 6)
- Link: Stash
The biggest difference is the portfolio selection. You can invest in foreign markets, certain sectors (like green energy), or causes you believe in. If you want, you can also choose allocations like “Aggressive” or “Moderate,” which are pretty typical.
You also get $5 free and your first month free when you use my link.
If you’re torn between Stash and Acorns, I’d recommend downloading them both and keep the one you like best. And delete the other. No love lost. They’re honestly very similar – just pick one and commit until your balance starts to grow – and it will, over time.
Wealthsimple and Betterment (Options 7 and 8)
So what’s the difference between an app and a roboadvisor? With the former, you do everything within an app. With the latter, you can reach a real live human if you need more help managing things.
The fees are comparable. So if you think you’ll need guidance, go with a roboadvisor. Same dealio with the asset allocation: answer a few questions and they’ll generate a mix based on your horizon and risk tolerance.
If you want to check out Wealthsimple, you’ll get $50 when you invest $100. So you get a 50% bonus right away – this is exclusive to Out and Out readers!
Or, you can get 75,000 Drop points (worth $75 in gift cards) when you sign-up through Drop. But you must invest at least $500 to earn the bonus. And you can only use Drop points for gift cards.
You can get an additional $400 for becoming an Airbnb host. So sign-up with my link for $50 when you invest $100, or $75 in gift cards when you invest $500. Then get another $400!
Lastly but not leastly, there’s Betterment, a perennial fave due to its ease of use, transparency, and straightforward fee structure. I can’t knock Betterment – I love what they’re doing.
Both Betterment and Wealthsimple are reputable, ethical companies devoted to financial good, which I love. They’re both geared toward “wealth management” as opposed to having a simple IRA account. That said, I think either would be fine if you want a human touch without exorbitant fees.
If this all sounds like gobbledy-gook, I’d recommend starting with Acorns and going from there. Remember, you can always make changes later while you give yourself time to research. But starting right this second is critical if you don’t have anything invested.
Don’t put off saving for your future because you’re waiting for some perfect moment – many of these options let you start investing with a single dollar. There’s no reason to delay. And you can set-up Acorns in 5 minutes.
If you want the best and cheapest option, I was blown away by Fidelity and TD Ameritrade – no account or fund minimums! But you’ll need to choose a fund to invest in, which can be overwhelming. Though I recommend the FZROX Zero Total Market index fund and calling it a day. 🙂
If you think you’ll want human assistance, consider Wealthsimple or Betterment. And if you already have a few thousand saved up, congratulations – you can also proceed directly to Fidelity, Vanguard, or Schwab if you’re comfortable choosing your own funds.
And hey look – I meant what I said about simply getting started. It’s easy to get lost in all the options. But your future is too important to keep putting off. If you’ve never invested, the earlier you begin, the more you’ll have in the long run. Even one extra year of compound interest can translate to thousands more down the road.
Hopefully this gives you an overview. Any questions, recommendations, or experiences with these investment companies? Please share in the comments!
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