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I am looking to move forward with my life and get my finances on track/be financially responsible. Part of that plan has me wanting to start looking at investing and other means to help grow my account (also provides a safe way to hide money away from temptation!). I know there are places like Fidelity, TD Ameritrade, and Charles Schwab, but I have no idea how to pick out which one is right for me. My bank also provides an investment interface as one of their options. Should I stick with my bank or pick an outside company?

How do I know if a company will match what I need? Essentially they are all the same, they allow for you to trade or get paid advice. How do I know which group provides the correct advice and not the advice that makes their pockets deeper?

All in all I am not sure what to do. But I know I need to do something. I don't even know if this is the proper first step to being financially stable and develop my financial future (Want to buy a home, have kids, do vacations, normal human stuff). Currently, I have made poor choices with my pay that has set me back on many of these life goals.

EDIT: Looking for US based advice

I'm not asking for a specific recommendation, but I would like general advice on how to choose an investment firm.

Trying to edit this to be on topic. I am really not so good in finances so I lack proper terms and knowledge to be asking anything deeply.

  • Ben thanks for the edit... that is exactly what I am looking for...I guess I assumed that was implied. – ggiaquin16 Nov 3 '17 at 17:22
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    Ben Miller made a good starting edit to help put this question on topic. I would suggest that you also change the bulleted wishlist (which looks like you are asking for someone to recommend a company that best meets these criteria) and focus on how to find out whether companies are customer friendly or not. – Nathan L Nov 3 '17 at 17:43
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    @ggiaquin looks good, I added a reopen vote. – Nathan L Nov 3 '17 at 17:48
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    I would suggest to rephrase the question before reopening. Ggiaquin says that all companies offer the same service. He should ask himself how one can find a "good" financial advisor. The man is more important than the company in my book. – Armando Nov 3 '17 at 18:12
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    Your banker will typically have FA's on staff., and sell shares in "middle of the road" vetted funds with good reputation and not too bad service fees. There are also non-profits that focus on low turnover index funds. ( essentially a bet that someone somewhere will make some money) that make sense for some people. Read articles by John Bogle. – pojo-guy Nov 5 '17 at 13:13
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Traditional brokers

There are tons of players in this market, especially in USA. You have traditional brokers, brokers tied to your bank and a bunch of startups. The easiest is probably a broker tied to your bank, because you probably don't have to wait to fund your brokerage account and can start trading immediately.

Often the older/traditional brokers don't have very intuitive interfaces, it's the startups who do a better job at this. But honestly it doesn't really matter, because you can use reporting services that are different from the services you use to execute your trades. Meaning that you only use the interface of your broker to execute trades (buy or sell), and use third party services to monitor your holdings.

Monitoring services:

Google Finance, Yahoo Finance, Sigfig, Morningstar,... are services allowing you to monitor your holdings. But you can't execute trades with them.

Start-ups:

Then there are a bunch of startups that offer investment services besides the traditional brokers.

Start-up > Robinhood

The most ambitious one is Robinhood, which offers the same service as a traditional broker, but completely free (most of the traditional brokers charge a flat fee and/or percentage when buying/selling hodlings) and with an intuitive interface. They're mobile first, but announced they will be launching their service on the web soon.

Start-up > Acorns

Another popular, mobile-first start-up is Acorns. They offer a lazy-investing service which rounds your everyday purchases and uses the change to invest. It's great when investing is not on your mind, but you still want to invest without realizing it.

Start-ups > Robo-advisors

Robo-advisors auto-invest your money across a bunch of funds picked based on your risk profile. Because the robo-advisers are fairly new, they often have the most intuitive interfaces. These robo-advisors often don't allow you to pick individual holdings, so these services are best when you want to passively invest. Meaning you don't want to look at it very often, and let them do the investing for you.

There are tons of robo-advisor start-ups: Betterment, Wealthfront, Personal Capital, Sigfig, FutureAdvisor,...

Also bigger parties jumped on this trend with their offerings: Schwab Intelligent Portfolios, Ally Managed Portfolio, Vanguard Personal Advisor, etc.

Summary:

It's fun to pick individual stocks, but if you start out it can be overwhelming. Robinhood is probably the best start, they have reduced functionality, but gets you going with an attractive interface.

But soon you'll realize it's extremely hard to beat the market. Meaning that hand-picking stocks statistically gives you a worse return than just buying into the general stock market (like S&P500). So you can decide to just buy one fund with a traditional broker that covers the general stock market. Or you can decide to try out one of the many robo-advisors. They haven't been around that long, so it's hard to tell how effective these are and whether they beat the market.

If you're young, and you believe in start-ups (who often try to challenge the traditional players), try out one of the robo-advisors. If you want to play a bit and are addicted to your smartphone, try out Robinhood. If you are addicted to your phone, but don't want to check up on your investments all the time, go for Acorns. Of course you can combine all these.

Lastly, there are tons of cryptocurrencies which might give you a large return. Tons of startups offer intuitive interfaces to trade cryptocurrencies like Coinbase, Gemini, Kraken. But beware, there is a lot of risk involved in trading cryptocurrencies, it's completely unregulated etc. But definitely check them out.

Oh, and you can also invest by giving out loans through LendingClub, Prosper etc.

Who can you trust?

Above gives you an overview of your options intermingled with some reasoning. But regarding your question "who can I trust" in terms of advice, it's up to yourself. Most traditional broker services don't give you any advice at all, you're on your own. Robo-advisors don't give you advice either, but let their proprietary algorithm do the job. Are these reliable? Nobody can tell, they haven't been around long enough, and they need to go through a bear market (a crash) to see how they respond during rough times.

Some robo-advisors offer you personal consultancy (I believe Sigfig and PersonalCapital) does this (limited to a few hours per year). But obviously they'll try to promote their robo-advisor services.

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    This is fantastic, I had no idea about all of these services and methods! The robo advisor sounds like just want I want. Something that will take a look at your risk factor and invest based on this. Acorns also sounds interesting! Ultimately, I am a noob with investing, and I don't have the time to study the market trends so hand picking isn't ideal... I am young (29) which is also why I would be looking for someone to give advice which doesn't seem to be given based on what you said. So something that will run off of automation would be next best option. – ggiaquin16 Nov 4 '17 at 19:34
  • After spending the whole weekend doing research, I decided to stick with Wealthfront. Betterment was a really close second. I liked how they did fractional investments and had no minimum deposit. But the fees, though only a few cents at my deposit level, made a bit of a deciding factor. Plus as the account grows, weathfront has better tax harvesting at 100k+. The other major deciding factor was the app. Wealthfront had 4.4 rating with 2k+ reviews in the iOS where as betterment was in the low 3s with only 200 reviews. Plus there seems to have been an update that many were not in favor of. – ggiaquin16 Nov 6 '17 at 18:30
  • Plus, I was liking that wealthfront has better diversification (does real estate and natural resources where betterment does not). Hoping my choice does not bite me in the butt later but I feel like for my first time getting into personal investing, wealthfront will be the right fit for me. – ggiaquin16 Nov 6 '17 at 18:31
  • Great to hear! Wealthfront and Betterment are indeed close contenders. Their offering will probably change (become even better) in the future. – brt Nov 7 '17 at 0:37

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