5 Popular Investing Platforms: Our Analysis + How To Decide Which Is Right For You
If you’ve landed here, chances are you understand that investing is an important and powerful tool when it comes to building wealth. You’re ready to get in the game, but may not be sure where to begin. That’s where we come in! Today, we’re breaking down 5 of the most popular investment platforms out there and sharing what we love (and don’t love!) about each!
If you’re not quite ready to take the plunge or need a 101 before jumping in, here are a few previous resources to help you get started!
If you have several competing money goals, click HERE to determine which to tackle first + when we recommend starting to invest.
Learn about why you might be contributing TOO much to your 401(k) HERE + what to do instead. As a reminder, if you have a 401(k) or 403(b), you are already an investor!
If you want an in depth overview, click HERE to access a recording of our 1-hour Investing 101 class.
A note before getting started - we always say that personal finance is PERSONAL. You can’t go wrong with any of the platforms below and all will absolutely improve your financial health. While we like some better than others, at the end of the day, it’s most important to find something that resonates with you + that you’re going to stick with, even if it’s different from what we use!
WEALTHFRONT
Minimum Deposit: $500
Fee Structure: 0.25%
Accounts + Services Offered: Cash Account, Line of Credit, Retirement Accounts (IRA, SEP IRA, Roth IRA + 401k Rollover), 529 College Savings, Taxable Investment Account
The Run Down: Wealthfront is the platform that I (Lauren), personally, use to invest.
what we love about it
1) Fee Structure - At 0.25%, the advisory fee is already below industry standard. However, in addition, Wealthfront offers a referral program that allows you to avoid paying any fees at all. No fee investing!? Absolutely unheard of! When you sign up through a referral link, you automatically get your first $5000 managed for free. For each friend that you refer to the platform, you’ll receive another $5000 managed for free. In theory, you could offset paying advisory fees for a lifetime. In all likelihood, you won’t be referring friends forever, but you could probably get your first few years for free! High management fees can really cut into the returns that you earn which is especially important when you’re starting out!
If you do choose to open an account through Wealthfront, click HERE to get your first $5000 managed for free!
2) Service Offering - Through Wealthfront, you could have your high yield savings account, retirement accounts, investment accounts and more! In addition, you can import all of your other account information, including student loans, mortgage, checking account balances, you name it! Wealthfront will optimize your investment strategy based on the health of your total financial picture and doesn’t evaluate each investment account in isolation. In addition, it’s super easy as a customer to have a one-stop shop for all of your accounts!
3) Risk Factor - People’s comfort level with risk varies greatly. Wealthfront takes this into account and requires you to complete an assessment to determine your risk tolerance and will recommend a risk factor between 0-10. As the market fluctuates, they’ll adjust your portfolio to ensure it aligns with your own comfort level. While many platforms ask you to select your risk tolerance, 0-10 is a much larger scale than most and, thus, Wealthfront has a larger number of funds and portfolios available for you to invest in.
4) Tax Loss Harvesting - In addition to advisory fees, taxes are another cost that can eat into your investment returns. Wealthfront’s technology executes trades that keep your tax obligation as low as possible and allows you to reinvest this tax savings - a concept known as tax loss harvesting. This keeps your year-end tax obligation low and your returns high!
5) Line of Credit - Wealthfront allows you to borrow up to 30% of your investment balance at any time for a low interest rate of 2.4%- 3.6%. (Rates will vary by customer). These funds can be borrowed without any application or credit check and are usually deposited to you within 24 hours. The line of credit allows you to access funds without actually selling your investments and paying fees and taxes to do so. There are certain situations in life such as buying a home, remodeling a home and more where you might want to access funds beyond what’s available in your savings account and this can be a super easy and low interest way to do so. Of course, you’re still going to pay some amount of interest, so we would never recommend this as Plan A or as a means to fund your Caribbean vacay, but it is a good option in certain scenarios.
where it falls short
If it wasn’t clear, I’m obsessed with Wealthfront and, after significant research, truly believe it to be one of the best, if not the best, options out there. Because it became my ultimate selection, there isn’t much that I think it falls short on and I really only think there is one area of opportunity.
Cash Balance - Wealthfront does not purchase fractional shares of funds, as some other platforms do, which does result in a small amount of cash sitting in your portfolio and not actively being invested. Of course, as you continue to deposit funds, this cash will be used to make a purchase, but at any given time, there is cash not earning any returns for you. At this time, I have just $56 sitting in cash, so it’s nothing sizeable, but is something to note as it differs from some other platforms.
ACORNS
Minimum Deposit: $0
Fee Structure: Flat fee of $1, $3 or $5 per month based on the package you choose.
Accounts + Services Offered: Checking Account, Retirement Accounts, Taxable Brokerage Account, Early Investment Accounts for Children, Financial Education , Cash Back Program
The Run Down: You’ve probably heard of Acorns because of its Round Up feature which makes investing feel super accessible and easy. The company has since greatly expanded beyond this service + has an attractive offering.
what we love about it
1) Accessibility - The Round Up feature that made Acorns famous allows you to link the platform to your external checking account, debit or credit card and will automatically round up purchases that you make. The spare change will be pulled for you to invest through Acorns. For example, you grab a latte for $4.79. Acorns will round your purchase up to $5 and take the 21 cent difference to be invested. This feature makes investing incredibly easy + proves that you don’t need a lot of money to invest. A little bit goes a long way. You can make additional one-time investments whenever you like.
2) Focus on Family - The focus beyond individual investing is a defining feature for Acorns. Through its Early service offering, you can open custodial accounts and invest funds specifically for your children. You can pull funds out for anything that directly benefits your children and any funds that remain as your child becomes an adult can be transferred over to them. It’s important to note that this is different from a 529 account offered by other platforms which is used specifically for education expenses and has tax advantages. If you’re looking to invest solely for your child’s education, I would opt for a different platform that offers a 529.
3) Cash Back - Acorns partners with over 350 brands to give you cash back to invest. When you link your card to Acorns and shop with one of the participating brands, you’ll have cash deposited back into your Acorns account to invest. The brands include big names such as Airbnb, Sephora, Expedia, Apple and more. This can help accelerate your investing even further and help you to earn returns on money you were spending regardless!
(To note, while Acorns does include a risk tolerance assessment which we love, the risk factors aren’t as broad as Wealthfront, nor are the portfolio and fund options as expansive, so we aren’t calling this out specifically as a pro, but do want to note that they offer this in some way.)
where it falls short
1) Round Up - While the Round Up feature is a pro for the platform, we also feel it is something that can turn into a con. If you rely solely on this feature to invest, it can easily turn into making you feel like you’re doing something without actually making a big difference. The website touts that the average Acorns customer invests $30 a month from spare change. While yes, we believe that you don’t need much to get started and a little bit can go a long way, if you’re trying to retire off of the Round Up feature alone, that’s probably not going to get you there. Again, this is only a con if you aren’t taking steps to invest additional funds + paying yourself first.
2) Fee Structure - While $1-5 a month sounds like nothing, depending on your account balance, the fee could work out much higher than competitors that charge as a %. For example, if you have a $5000 balance and opt for the $3/month subscription, that would be $36/year in advisory fees - or apprx. 0.72% - which is substantially higher than other platforms out there and actually gets pretty close to the cost of an in person financial advisor which averages around 1%. When you get to a certain account balance, the flat monthly fees absolutely are a better deal, but when you’re just getting started, a flat fee investment platform can be significantly more expensive and can eat into your returns.
In addition to the (potentially) higher advisory fee, Acorns does not have a tax-loss harvesting feature at this time which could result in you paying more taxes on your earnings each year, eating into your returns. On top of this, if you ever decide to move your investments to another platform at some point down the road, the fees are very steep at $50 per ETF. While most platforms charge some kind of fee to do this, it’s typically a flat fee of around $75 total vs $50 for each ETF.
3) Investment Options - Acorns has just 7 ETFs available for investment which is a pretty limited offering, especially if you’re paying them (potentially) higher fees. While their offering allows you to invest in bonds, US stocks and foreign stocks to diversify your holdings, it’s still not robust. In comparison, Wealthfront offers 18 ETFs across 9 asset classes and Ellevest offers 21 ETFs across 21 asset classes. (For more information on what an ETF is, sign up for our Investing 101 course HERE or read this digestible breakdown from Ellevest HERE.)
ELLEVEST
Minimum Deposit: $0
Fee Structure: Flat fee of $1, $5 or $9 per month based on the package you choose.
Accounts + Services Offered: Traditional, Roth or SEP IRA; 401k or IRA Rollover; Taxable Investment Accounts; Checking Account, Savings Account, Debit Card, Complimentary Access to Online Workshops, Videos and On-Demand Learning; Discounted Sessions with Financial Planners + Career Coaches
The Run Down: Ellevest is Kelda’s investment platform of choice + we both cannot say enough good things about the platform and its mission. Its founder, Sallie Krawcheck is #goals. Even if you don’t opt for Ellevest as your platform, you absolutely must sign up for their newsletter What The Elle. Click HERE to register. Totally free + it is life changing.
what we love about it
1) Female Focus - Ellevest is women-founded and specifically designed with women in mind. The financial services industry was founded by, and for, men. Even today, women hold just 11% of management roles in investment firms. This number is a record high, but still far too low. As women, we have unique financial challenges to our male counterparts. We live 7 years longer than men, earn 81 cents for every dollar a man makes + are less likely to invest, meaning there is both a wage gap and a wealth gap - which is even larger. Our lives and our financial picture look very different to men and choosing a platform that keeps this at the center of its mission is extremely unique and valuable to us.
2) Impact Investing - Money talks. The way we spend our money allows us to make a statement about what we value and believe in. The same can be true with what we invest in and Ellevest allows customers to do that through its Impact Investing option. This allows you to direct the money that you are investing towards the issues and concerns that you care about. For example, you can direct your funds to invest more heavily in companies that have more women leaders (which historically have higher profits and returns), companies that have higher standards of sustainability, companies that support affordable housing programs, etc. With Ellevest, financial returns and social progress can move in the same direction. We absolutely LOVE this feature.
3) Multi Goal Investing - We all have a wide variety of future goals that require different amounts of money and will happen at different points in life. Buying a home, planning a wedding, having children, purchasing a rental property, etc. Ellevest allows you to open up to 5 goal specific investment accounts and will allocate your funds for you based on the individual timeline, amount needed, etc. Such a cool feature!!
4) Learning - While most investment platforms have a blog of some kind and a few helpful videos and resources, Ellevest, because of its female focus, takes financial education to the next level. As an Ellevest member, you’ll receive access to so many in-depth online workshops and courses that span beyond personal finance and focus on career, insurance, ethics and more!
where it falls short
As with Wealthfront, due to our extensive research and final selections of platforms, Ellevest is another that we believe gets a perfect score on nearly every metric - expansive ETF offering, diverse asset classes, full service package (they literally offer every account you could possibly need and include consultations with their financial advisors) and so much more. We could go on for days. There is only one area here that’s an area of opportunity.
1) Fee Structure - At $9/month for its top tier membership, Ellevest is - potentially - the most expensive platform out there. As a reminder, I say potentially as this depends on your account balance. With a high account balance, a flat $9/month could be a huge savings over a percentage-based structure. At lower balances, $9 a month could be super high. However, if you were going to decide between the two fee-based options on here (Acorns or Ellevest), Ellevest is more “worth” it in our opinion. They offer all of the same account options as Acorns, plus substantially more. In addition, we absolutely love the Impact Investing and Multi Goal Investing features that are hard to find elsewhere. They have the most robust ETF offering and place a huge emphasis on learning and education. You’re getting much more for your money. To note - the first two tiers of membership with both platforms are the same price.
STASH
Minimum Deposit: $0
Fee Structure: Flat fee of $1, $3 or $9 per month based on the package you choose (They will waive your first month’s membership fee.)
Accounts + Services Offered: Taxable Investment Account Traditional or Roth IRA; Bank Account; Life Insurance Coverage; Up to 2 custodial accounts for children; Budgeting planners; Saving tools; Stock Back (Cash Back)
what we love about it
1) Stocks - Stash offers ETFs as investments which aligns with all previously discussed platforms. However, they also have a portfolio of 150 companies that they will buy individual stocks from to add to your portfolio which is not part of the investment strategy of the other platforms and could appeal to some investors.
2) Fractional Shares - Stash will purchase fractional shares of stocks or ETFs, so that every dollar that you invest is working for you and you won’t have any funds sitting unused as cash.
3) Mission Based ETFs - While Stash offers some of the same ETFs that other platforms do, they rename all of their funds to help provide a better understanding of what you’re investing in. For example, rather than seeing you have ownership in “SPDR S&P BioTech ETF,” Stash renames this to “Modern Meds” and explains that you’re investing in pharmaceutical companies, product development and biotech startups. I personally love this feature and wish that all platforms did this. While Wealthfront invests in many of the same funds for me, I think it’s interesting to know exactly what it is!
where it falls shorts
1) Stock Back Card - Similarly to Acorns, Stash offers the ability to earn cash back to be invested based upon your everyday purchase. Stash will reward you 1.25% on all purchases and 5% on purchases made with select brands where Acorns rewards you on just the brands that they partner with. Despite this, we still think Acorns has the more attractive Cash Back program as Stash requires that purchases be made through their debit card where Acorns allows you to link your existing cards and accounts. We wouldn’t necessarily want to open a checking account and debit card with Stash to take advantage of this feature, as we prefer the benefits that we get with our travel cards. (As a reminder, our favorite travel cards are linked HERE with unique referral links and sign up bonuses).
2) Portfolio Management - All previously mentioned platforms invest based on your own risk tolerance, automatically balance your portfolio as the market fluctuates and makes all trades for you. This allows you to a be an extremely passive participant while earning consistent returns. Stash provides some guidance and basic information on the funds available, but puts more of the work and decision-making in your hands. This comes with a much larger degree of risk. This is why Stash renames ETFs. With the customer needing to make the active investment decisions, you might want to know more about what you’re choosing to buy. Stash might be an app I would use on the side for fun and to play around with some of my extra funds, but would not be what I would use for my primary platform and as my means to building wealth.
ROBINHOOD
Minimum Deposit: $0
Fee Structure: $0
Accounts + Services Offered: High Yield Savings Account, General Investment Accounts, Cryptocurrency , Margin Accounts
The Run Down:
Of the top 5 investing platforms that we’re covering here, Robinhood is by far the most unique. Each of the other 4 platforms are essentially offering very similar services, but with different target markets and fee structures. Robinhood is in a league of its own and is for a very specific type of investor. We wouldn’t choose to use it as our primary investing platform, but we could definitely see ourselves using it in conjunction with another roboadvisor.
what we love about it
1) Cryptocurrency - Okay, maybe this isn’t a love as neither of us invest in cryptocurrency or advocate for it, but this is something that sets Robinhood apart and is worth calling out. If you’ve been interested in buying bitcoin or dabbling in this area at all, Robinhood is unique in its ability to offer this. (Note - while cryptocurrency doesn’t align with our investment strategy, you are by no means wrong if it’s something that you choose to do! We’re just being honest with our own choices!)
2) Margin Trading - Again, maybe not a love exactly, but another very unique feature that Robinhood offers. When you hit $2000 in account balances, you are eligible to participate in margin trading. Margin trading is essentially the practice of the broker (in this case Robinhood) lending you money to invest. It’s essentially a high interest loan that you can use solely for investing. Yes, in theory, it’s a nice concept to make money using someone else’s capital, but, if your picks don’t end up performing, you could lose a lot of money. What immediately comes to mind for me is a Vegas casino offering a customer a line of credit to keep gambling - scary. While it’s not for me, as they say, you have to take big risks to earn big rewards and this might be a feature of interest to some!
3) Complimentary Stock - When you sign up for a Robinhood account, even before making your first deposit, they’ll thank you with a complimentary stock! The stock is picked at random, but the options include some big names like Apple, Microsoft, Visa, GE, etc., so could be a very lucrative sign up bonus. Even if you ended up with just a $20 stock, there are no other major platforms at this time that are giving a similar bonus.
where it falls short
1) Bonds - Okay, boring right? Or at least that’s the rep that bonds get because they’re known to provide pretty low returns. However, bonds are an essential part of our investment strategy to help diversify our portfolio and balance out some of the risks that we are taking. Robinhood doesn’t offer bonds or mutual funds which would take it out of the running for us as our primary investment platform.
2) Account Offering - Robinhood only offers taxable investment accounts, so you won’t be able to open an IRA through this platform. If you’ve been following us for a while, you know how much we believe in the importance of an IRA, so if you opted to use Robinhood AND you wanted a retirement account, you would need to open investment accounts across multiple platforms.
3) Risk - Because Robinhood’s primary focus is on stocks and trading and it puts the consumer in the active trading role, there is a significant amount of risk involved. If you’re someone that just wants to park a set amount of money into an account each month, watch it grow and pull from it to fund a home purchase, retirement or other big milestones, Robinhood probably isn’t the way to go. If your image of investing is closer to Wolf of Wall Street, Robinhood is the closest to this picture. Our investing strategy (along with Warren Buffet’s) is passive, consistent and doesn’t try to beat the market.
So there you have it! Everything you need to know about 5 of the most popular investment platforms out there today. Our ultimate analysis is as follows, but a reminder again that personal finance is PERSONAL.
If you’re looking for a full-service platform, Ellevest and Wealthfront are the clear winners here and where we would recommend people get started.
If you consistently have extra funds each month from your 50% or 30% and want to accelerate your investing, we would add on Acorns and take advantage of the Round Up Feature and the Cash Back program.
If you’re ready to start doing some active trading and have some fun with the stock market, Robinhood or Stash would be the way to go here. We would choose Stash, ultimately, as there is still some guidance to educate you about how to build a portfolio, information on each fund and stock, etc. To note, neither of these options would be our primary investment platform, but rather one that we would add on down the road when we feel comfortable with the investments that we have built up for retirement and life goals and milestones.
Comment below with any questions, comments or thoughts and be sure to share with any friends that are looking to get started investing as well! For more personal and in-depth questions, check out our Money Bootcamp classes or book a one-on-one consultation - links to both can be found HERE.
