Not to quibble - but having just read this (https://www.thepennyhoarder.co…ounts/system-rigged/) - I think it’s worth asking…
Does it still make sense to consider the Stash/Acorns/Robinhood class for small, self-directed brokerage accounts?
Once upon a time - as recently as just a few years ago - I think the case was easy… zero/low minimums to open the account… ability to trade buy/trade fractional shares. If you didn’t have 5-10k to start with - sure.
I’m a pretty conservative investor - and a fee hawk to boot. This means that 1)I’m certainly not involving myself in option chains, much less any margin-based trading or other exotics, 2)I’m a buy-and-hold guy - not a day trader, and 3)above all, if you aren’t beating the S&P 500 – you ought to just be in ETFs.
Fintech has done great things for the small dollar investor - I started years ago with Wealthfront, FWIW… but I’m not sure it mattered much that I picked Wealthfront over Betterment - it just so happened that WF had a better offer than BM at the time. I had a reasonable bonus to invest, so I let WF’s lovely little robots handle it across a portfolio of auto-managed ETFs.
Eventually - about 3 years ago - I decided to dip my toes in a brokerage account where I’d dive into individual equities. I had started paper/what-if tracking, learned how to read a 10-K, etc - and thought I was prepared to start trying to beat my robo-returns.
At the time - I looked at the options… I considered the online brokerages that were once nextgen (E*Trade, TD Ameritrade). I looked at the then-startups - Stash and Robinhood.
But - I ultimately went with Fidelity. They had - then, just recently - cut their minimum to 0… they didn’t (then) offer fractional shares, but…well, now they do.
A couple years in, now – I’m struggling to see why one would pick Stash/Robinhood/etc over the “old stalwarts” (not just Fidelity, but it looks like Schwab and Merrill and etc) pretty much match all the startups on offers. No minimums. No fees. Fractional share trades. But - most importantly, NO recurring fees or monthly charges. About 2.5 years in - the only fee I’ve paid on anything in my Fidelity account are a few pennies on some fractional share reinvestments on some equities I bought on foreign exchanges (fees I was well aware of when I bought into those individual stocks and decided to reinvest the dividends).
Once upon a time, I think the new guns made sense- lower minimums, zero fees, fractional shares… but it just seems to me like the “stalwarts” have aggressively matched them - and, in many ways (like no recurring account fees), are beating them.
FTR - I have no “relationship” with Fidelity other than the fact that I have an account with them. Don’t work for them, don’t have any (direct - I imagine one of my ETFs might have positions) investments in them - just an account. Well, technically - 2 accounts; they also manage my employer 401k (which was the main reason I bothered checking on their brokerage options - I liked their resources in my work plan).
I’m willing to be convinced that I’m missing something - and I can only speak for Fidelity (but online comparisons seem to indicate it’s the same with Schwab, Merrill, et al)… The only difference I see is that with Stash/etc – I’d be paying somewhere in the neighborhood of $12 to $100+ a year in fees.
