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Investing

Vanguard Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Vanguard has made its reputation by lowering the cost of investing. The company touts the fact that the average expense ratio for its Mutual funds and ETFs is 82% less than the industry average. This means more earnings for investors, which is especially good for long-term investors who have decades to let their money grow. Whether you are investing for retirement or long-term wealth accumulation, Vanguard offers one of the lowest-cost and time-tested methods for consistently growing with the market.

However, since the investment philosophy that guides Vanguard’s business is to minimize the cost of investing and maintain long-term discipline, active traders may find that Vanguard is not right for them. You will not find trading tools or platforms on Vanguard, and the commission schedule is onerous for most investors who make more than 25 trades per year. In addition, if you need more hands-on advice, you must have $50,000 invested to make use of their financial advisor service.

Vanguard
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The bottom line: Vanguard provides excellent value to passive investors who are happy to allow their money to grow with the market, but the brokerage is not set up logistically or financially for very active traders, nor does it provide financial advising for low-volume investors.

  • Low investment fees preserve investment gains.
  • Passive investment in index funds is encouraged.
  • Active trading is difficult and expensive on this platform.

Who should consider Vanguard

Vanguard really shines as a brokerage for investors building retirement portfolios. It encourages investors to choose from a number of investment options that mitigate potential risk, such as index funds. These funds are set up to track the performance of a specific market index, such as the S&P 500. Such funds do not need an active manager, which keeps the fees low, and the investor can expect to do about as well as the market overall.

Anyone who is investing for retirement may be well-served by the basic strategy behind index funds, which were invented by Vanguard’s founder, Jack Bogle. A retirement investor’s funds will grow in a relatively low-risk and low-cost investment that will benefit from the long time frame that passive index fund investing requires.

Vanguard’s wide variety of accounts and investment options includes Stocks, Bonds, exchange-traded funds (ETFs), and Mutual funds. The company also has developed its own branded Mutual funds and ETFs.

Vanguard fees and features

Stock trading fees
  • $7 per trade for the first 25 trades per year, $20 per trade thereafter for accounts with less than $50,000
  • $7 per trade for accounts with $50,000 to $500,000
  • $2 per trade for accounts with $500,000 to $1M
  • $0 per trade for accounts with $1M to $5M for the first 25 trades per year, $2 per trade thereafter
  • $0 per trade for accounts with more than $5M for 100 trades per year, $2 per trade thereafter
Amount minimum to open account
  • $1,000 for Vanguard Target Retirement Funds and Vanguard STAR® Funds; $3,000 for most other Vanguard funds
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Forex
  • Crypto-currency
Account fees (annual, transfer, inactivity)
  • $20 annual fee for account balances below $10,000; waived if you have at least $10,000 in Vanguard funds or ETFs or sign up for statement e-delivery
  • $0 full account transfer fee
  • $0 partial account transfer fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • SEP IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
Ease of use
Mobile appiOS, Android, Fire OS
Customer supportPhone, Email
Research resources
  • SEC filings
  • Mutual fund reports

Strengths of Vanguard

  • Low investment fees: Though it may seem like no big deal to pay a 1% investment or management fee, this cost compounds in the same way interest does. Vanguard reported that the average expense ratio across the entire fund industry (excluding Vanguard) was 0.62% in 2017, or $62 for every $10,000 invested. Meanwhile, Vanguard’s expense ratio during that same time was 0.11%, or $11 for every $10,000 invested, which is 82% lower than the average.
  • Fund performance: Investors with Vanguard can feel confident about the firm’s track record of success, as 89% of Vanguard’s funds outperformed their peers over the 10-year period ending Sept. 30, 2018. Combine this high performance with the low fees, and Vanguard investors can reasonably expect their portfolios to do quite well over time.
  • Retirement education: Vanguard offers a great deal of high-quality and well-researched educational information and tools for investors who are preparing for retirement. With the website, you can determine the best investment options for retirement, decide how to prioritize your financial goals, predict when you can afford to retire, estimate expenses in retirement and weigh the benefits of various tax strategies.
  • Vanguard Personal Advisor Services: Investors who would like some expert guidance can partner with a financial professional using Vanguard Personal Advisor Services. The advisor will help you articulate your financial goals and develop a personalized financial and investing plan for you. Your advisor also will be available for questions or support as you move forward with your investment plan. Only investors with $50,000 or more under management may access Vanguard Personal Advisor Services, and there is a 0.30% annual fee for the service.

Drawbacks of Vanguard

  • Active Trading: Vanguard is not set up for active trading. This is in part because active traders are not Vanguard’s target clientele. However, the lack of simple trading tools or platforms and the fact that the cost per trade goes up after making a certain number of trades per year for some accounts mean Vanguard is effectively discouraging its customers from doing active trading. While this is not a problem for investors who are trying to prepare for retirement, investors who would like to have a one-stop shop for passive and active investing will have to look elsewhere.
  • Advisor services may be out of reach: Vanguard’s Personal Advisor Service requires investors to have at least $50,000 invested, which means beginning investors or those with fewer assets in their accounts may be shut out of getting personalized advice. This could be a problem, as it is the new investors who are most likely to need such personalized service to get on the right track.

Is Vanguard safe?

While every investment carries some inherent risk, you can rest assured that your money is as safe as possible invested in Vanguard funds. First, Vanguard is a member of the Securities Investor Protection Corporation (SIPC), which protects individual investor assets up to $500,000. Vanguard provides additional coverage for eligible customers through Lloyd’s of London.

In addition, Vanguard uses multiple security measures to ensure that only the customer (and no one else) has access to his or her accounts.

Final thoughts

Vanguard is an excellent choice for mid-level to high-level investors who want set-it-and-forget-it investments that will provide a stable retirement or otherwise grow wealth. But that does not mean it is the right choice for everyone.

Anyone who wants to do active trading may find Vanguard to be limiting and may be happier with a brokerage like Ally Invest or TD Ameritrade. Both of those brokerages are better set up to allow active trading and in fact encourage the practice by reducing trading fees after you have completed a certain number of trades per year. Vanguard, on the other hand, increases its trading fees after you have made a certain number of trades per year for some accounts.

In addition, younger investors with less money to work with may find that they can’t get the kind of personalized service they need to make the best choices with their money. For such investors, Betterment, with its focus on improving investor behavior and providing personal financial advice, may be a better fit.

Ultimately, Vanguard does what it does very well for its target clientele. If you are outside of that target, it may not work for you.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Emily Guy Birken
Emily Guy Birken |

Emily Guy Birken is a writer at MagnifyMoney. You can email Emily here

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Investing

SoFi Active Investing Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Well known for its lending business, SoFi has branched out more recently into investing products. SoFi Active Investing is the company’s online brokerage product, providing a platform for users to invest in individual stocks and exchange traded funds (ETFs).

SoFi Active Investing offers very limited choices for investing, and should be considered a product for people who want to learn the basics. That said, this platform’s biggest hook makes it a very attractive choice for investing beginners: it charges zero transaction fees. In addition, you can get started buying fractional shares of stock with as little as a $1, and it provides great educational resources.

SoFi Automated Investing
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The bottom line: SoFi Active Investing provides beginners with easy-to-use online brokerage that helps them invest in stocks and ETFs, and learn about the market.

  • Invest in a variety of stocks and ETFs, including fractional shares.
  • Create a personal watchlist and get real-time investing news and data.
  • Get access to other SoFi membership benefits, including rate discounts and community events.

Who should consider SoFi Active Investing

SoFi Active Investing is best for beginners who would like to gain hands-on experience in trading individual stocks. Fractional investing through the Stock Bits feature can be a very useful tool, since you can buy a small piece of a more expensive company for as little as $1.

While best suited for beginners, intermediate and even advanced traders can benefit from using SoFi’s brokerage account. SoFi doesn’t charge trading commissions like most other online brokers. More active traders can benefit from using this product and save money on fees, rather than needing to pay each time an order is executed.

Note that investors who are more focused on long-term goals and want a more hands-off approach to their portfolio might look at SoFi Automated Investing, the company’s robo-advisor platform. This SoFi product takes care of the heavy lifting for investors by offering a selection of ETF portfolios.

SoFi Automated Investing fees and features

Amount minimum to open account
  • $100 one-time deposit or $20 monthly deposit
Tradable securities
  • ETFs
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
Ease of use
Mobile appiOS, Android
Customer supportPhone, Email, 4 branch locations

Strengths of SoFi Active Investing

  • No transaction fees: While any ETFs you choose come with expense ratios, there are no transaction fees, even for trading individual stocks. You can expect to pay $4.95 (or more) at several more traditional brokerages. Robinhood is one of the few other brokers that doesn’t charge transaction fees.
  • Access to fractional shares: If you don’t have enough money to purchase a full share of stock, you can purchase fractional shares of select stocks for as little as $1.
  • Invest up to $1,000 instantly: If you have a linked bank account, and meet certain requirements, you can invest instantly, without waiting about four business days for funds to clear.
  • SoFi membership bonuses: When you open a SoFi Active Investing account, you become a SoFi member and get access to certain bonuses. These bonuses include things like rate discounts on other products, as well as invitations to exclusive events and networking opportunities.

Drawbacks of SoFi Active Investing

  • Cash balance doesn’t earn interest: The money you have sitting in the cash balance portion of your SoFi Active Investing account doesn’t earn interest. Some other brokers will pay a small amount of interest on cash that hasn’t been invested yet.
  • Not every stock comes with fractional investing: While it’s possible to buy fractional shares, the list of stocks where this is possible is limited. Not every stock comes with the ability to purchase fractional shares. SoFi updates its list of Stock Bits based on demand.

Is SoFi Active Investing safe?

SoFi Active Investing is as safe as any investment. It is important to understand that anytime you invest, you are putting your money on the line and you could lose it — this is true no matter what broker you use.

However, SoFi offers its account under SoFi Securities LLC, a broker registered with the Securities and Exchange Commission (SEC). Additionally, SoFi carries SIPC insurance, which is designed to protect investors if the broker fails. Realize, though, that the SIPC won’t protect you from economic and market events — those losses are entirely yours.

SoFi is also regulated by the Financial Industry Regulatory Authority (FINRA), which helps keep your investments safe. Before investing, it’s a good idea to use resources like FINRA’s BrokerCheck to see if there are problems related to any broker. Additionally, you can look at the Better Business Bureau to see if there are complaints against an investing company.

Final thoughts

SoFi Active Investing is a good choice for beginners who want to start active trading. It’s possible to invest in individual stocks and fractional shares without paying transaction fees. You can open an account fairly easily, and when you link a bank account, you can invest instantly.

There are other brokers, like Robinhood, that provide access to individual stocks without high costs, and if you don’t trade very frequently, established brokers like Charles Schwab and Ally Invest can be good choices, even with transaction fees.

However, it’s important to note that SoFi is relatively new to the investment space, and you might not have access to some of the tools commonly available with more established brokers. Additionally, if you’re not sure that you’re ready for active investing, it can make sense to start with a robo-advisor. SoFi’s Automated Investing product might be a good choice, or you might consider another well-known investment product, like Ellevest, Wealthfront or Betterment.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here

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Investing

M1 Finance Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

M1 Finance is an online investing platform that combines robo-advisor functionality with certain features more typically found on conventional broker platforms. This makes M1 Finance a somewhat unique product: It offers curated investment portfolios for different goals and risk tolerances, together with the ability to build your own investment portfolios.

No matter which way you choose to compile your investments, M1 Finance lands squarely in the robo-advisor camp, as it manages them for you automatically and handles all the necessary rebalancing. M1 offers taxable, trust and retirement accounts, and users can open up to five accounts under one login. Best of all, M1 charges no annual management fees.

M1 Finance
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The bottom line: This highly customizable robo advisor is a good option for investors who have gotten beyond the beginner stage, as well as more experienced investors.

  • Build your own investment portfolios choosing from an array of stocks and exchange traded funds (ETFs)
  • M1’s curated investment portfolios give you preset options
  • Robo-advisor technology and dynamic rebalancing keep your investments on track

How does M1 Finance work?

M1 Finance refers to investment portfolios as “pies,” and the different stocks and ETFs added to each portfolio “pie” as “slices,” which you may find either charming or goofy. When you sign up with M1 and choose your first pie — one designed by M1, one with “slices” you’ve selected yourself, or a mix of the two — the platform shows you how it would have performed over the last 10 years (this is called a “backtest” in the professional investing world).

After establishing a portfolio “pie,” you complete a quick series of questions about yourself, including income, net worth, liquidity, and investment time horizon. M1 then asks you to link up a bank account to fund your investments. Once linked, you can fund your first pie, and may choose more portfolio pies.

If you decide to build your own portfolio pies, you can choose from more than 4,000 individual stocks and more than 1,900 ETFs. Each pie can hold up to 100 slices. M1 requires a minimum balance of just $100, and charges no fees to manage your portfolios. M1 makes its money from interest on cash deposits, interest on margin loans, and through the annual fee on their optional M1 Plus membership, among other things.

For users who want the platform to choose investments for them, M1 Finance offers curated pies, from target retirement portfolios (sorted by conservative to aggressive) to socially responsible investing portfolios. There’s even a “Cannabis Pie” that offers exposure to publicly traded cannabis producing, manufacturing and distributing companies.

Who should consider M1 Finance

M1 Finance has features that would appeal to both journeymen and more experienced investors. The latter will like the build-your-own portfolio option, while all users will appreciate curated portfolios based on things like your target retirement date or your desired mix of stocks and bonds. If you feel comfortable choosing your investment approach, you can set up automatic investments that will fund your account over time.

For true beginners, the M1 platform might be a little too DIY. Although you can choose from the site’s pre-selected investment mixes, there are no recommendations based on your time horizon or other measures — you’re on your own to select one. If you need help, there are no advisors available, as with some other robo-advisors — you must submit a support request via contact form.

M1 Finance fees and features

Current promotions

Current M1 clients get $25 off their first year of M1 Plus, M1's premium product.

Stock trading fees
  • $0 per trade
Amount minimum to open account
  • $100
Tradable securities
  • Stocks
  • ETFs
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $100 full account transfer fee
  • $100 partial account transfer fee
  • $20 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
Mobile appiOS, Android
Customer supportPhone, Email

Strengths of M1 Finance

  • No fees: M1 charges no fees to manage your portfolio, and requires only $100 to start investing, after which you can invest in increments of $10. There is, however, an inactivity fee if you have less than $20 in your account and there’s no activity for 90 or more days, and the site charges to close accounts: $100 for outgoing transfers, for instance, and $100 to terminate each IRA.
  • Customizable portfolios: Unlike some robo-advisors that lock you into their investment selections based on your risk tolerance, M1 Finance gives you a lot of leeway. You can select your own stocks and funds you’d like to go into your investment pie, or you can go with one of the site’s professionally curated pies, such as “Moderately Aggressive” or “Responsible Investing.” You can also choose a combination of the two approaches, filling part of your pie with your picks and part of your pie with theirs.
  • Fractional shares: M1 allows investors to buy fractional shares of stocks and funds, so every dollar you point toward your portfolio will be used when you purchase investments.
  • Rebalancing: Using a method it calls Dynamic Rebalancing, M1 will rebalance your portfolio as you deposit and withdraw cash, and the site will reinvest your dividends once your cash balance reaches $10, or whatever threshold you’ve chosen.
  • Additional features: With M1 Borrow, users with accounts with a balance of at least $10,000 can borrow up to 35% of their portfolio at 4.25%. M1 Spend allows users to keep cash in a checking account, and if you sign up for M1 Plus for $125 a year (currently on special for $100), you’ll earn 1.5% APY on your cash.

Drawbacks of M1 Finance

  • Too much freedom: Unlike most robo-advisors, which typically recommend pre-baked investment portfolios for you based on your answers to questions about goals and risk tolerance, M1 lets you invest in whatever you want. This could be bad news if someone loads up their portfolio with stocks without doing any research, or might be overwhelming for an investor who wants more hand-holding.
  • Not much guidance: The site’s setup includes questions like, “What is your liquid net worth?” without any explanation for beginners about what that might mean. The site also asks users to rate their risk tolerance — low, medium, high — without any accompanying details. Many other robo-advisors provide greater amounts of background detail on the investing process, and offer more advice for novice investors.
  • Not for day traders: M1 makes trades just once every day, during the “trading window,” at 9 am Central Time. If you’re looking to capitalize on daily stock price fluctuations, this may not be your ideal platform.
  • No tax-loss harvesting: Although M1 uses a tax minimization strategy to reduce the taxes you owe when you sell securities, there is no tax loss harvesting offered. When you request a withdrawal from your account, an algorithm sells securities in the order of: losses that offset future gains, lots that result in long-term gains, and then lots that result in short-term gains.

Is M1 Finance safe?

M1 Finance has all of the typical protections in place. It is a registered broker/dealer with the Financial Industry Regulatory Authority (FINRA), a member of the Securities Investor Protection Corporation (SIPC) and carry SIPC insurance that protects against the loss of cash and securities held by a customer up to $500,000. They also have supplemental SIPC insurance, and M1 Spend and M1 Plus accounts are FDIC insured up to $250,000.

M1 has also taken measures to protect personal information. Your data is never stored on any device, and all information is encrypted in transit and at rest. The connection to your bank is managed via an electronic key — M1 doesn’t store your bank credentials.

Final thoughts

M1 Finance offers features that will appeal to both experienced and beginner investors, from highly customizable portfolios to pre-set investment mixes that users can set on auto-pilot. Although there’s not much guidance on the site, users can open an IRA, choose a target date retirement mix, set up automatic investments and they’re set — or they can fill a portfolio with 100 individual stocks and ETFs of their choosing. With no management or trading fees, users are paying just the expenses on the investments themselves, and you can invest as little as $10 at a time. Compared to other robo-advisors charging higher fees and offering fewer investment options, there’s a lot to like here.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kate Ashford
Kate Ashford |

Kate Ashford is a writer at MagnifyMoney. You can email Kate here