In this article, I’ll explain the similarities and differences between Fidelity Investments, Charles Schwab Corporation and The Vanguard Group. My goal is to help you decide which brokerage you should use to 耀竣金融配资_在线配资炒股:manage your own portfolio — or maybe confirm that your money is already in the right place.
Table of Contents
- 3 Top Investment Companies for Most Investors
- 7 Reasons To Choose a Different Investment Company Option
- Other Investment Companies in 2023
- How To Choose the Best Investment Company for You
- 耀竣金融配资_在线配资炒股:Clark Howard’s Investing Advice
I updated this article in May 2023 and I review it every six months.
3 Top Investment Companies for Most InvestorsThere are more places to invest your money than ever. It’s easy to get overwhelmed by the volume of options — and opinions. But money expert Clark Howard consistently recommends these firms as the best investment companies:
“There are three old-line players that are really, really good low-cost providers that I love as choices,” Clark says. “These three were all considered to be upstarts, and now they dominate the industry. And others will come along that will come up with a better way of doing it than Vanguard, Fidelity and Schwab. But that hasn’t happened yet.
“The reason I always go in my recommendations to the three of them is that what they offer is so comprehensive, it’s affordable and it’s all about you.”
There are reasons why you may consider another investment firm. However, these three investment companies will meet the needs of almost everyone.The American public has nearly $20 trillion invested through these three brokerage firms as of May 2023. That’s no accident.
Fidelity, Schwab and Vanguard have specific qualities that appeal to investors, which I’ll discuss shortly. But they’re the best overall because they charge minimal fees, including $0 commissions on stocks, 耀竣金融配资_在线配资炒股:mutual funds, exchange-traded funds (ETFs) and options. They all offer a variety of low-cost index funds, strong research and educational tools and give you the ability to invest in many different asset classes.You can do your banking, set up retirement accounts or even create a trust fund for your children with these three best investment companies. They provide everything a regular investor needs.
3 Best Investment Companies
- Inexpensive in every way
- Top-notch research
- Strong educational content
- Healthy percentage of funds are pricey
- Tools scattered over multiple platforms
|$0||Stocks, ETFs, Options, Mutual funds, CDs, Metals||Taxable, Retirement, HSA, Trust||Yes|
The Details: When I ranked 耀竣金融配资_在线配资炒股:the best stock trading platforms, I labeled Fidelity as “best overall.” Fidelity is among the best when it comes to fees, research, education and customer service.
For instance, Fidelity doesn’t profit by selling your trades to third-party companies, a controversial practice called Payment for Order Flow (PFOF). The company’s decision not to use PFOF helps ensure that you’ll get the best possible price on your trades.
Fidelity also allows customers to invest in more than 10,000 mutual funds with zero transaction fees. It even offers several mutual funds with zero expense ratios and no minimum deposit (Fidelity Zero funds). Higher-cost options do exist within Fidelity, so take care to check the fees before moving forward.You might expect fewer features from a company that offers rock-bottom prices. That’s not the case with Fidelity. It offers customers insights from 20 different third-party research firms. Its in-house market analysis, Fidelity Viewpoints, consistently draws praise. Fidelity’s detailed but intuitive stock screener is worth pointing out as well. If you’d like to learn more about investing and how to manage your own portfolio, you can take advantage of Fidelity’s educational opportunities. That includes free in-person help, investor seminars and a strong online learning center.
- Best site for ETFs
- Great research and screening tools
- Large volume of low-expense funds
- Schwab keeps a hefty percentage of the interest on your uninvested cash
- Limited fractional shares trading
Stocks, ETFs, Options, Mutual funds,
|Taxable, Retirement, HSA, Trust||Yes|
The Details: Schwab started undercutting traditional brokers on pricing starting in the mid-1970s, making it the first “discount broker.” But it’s not some legacy company that’s stuck in its ways.Within the last three years, Schwab made a huge splash within the investment industry first by moving to $0 commission trades and then by . Along with Fidelity, Schwab is probably one of the two best investment companies when it comes to research and investment tools. Schwab also gets a gold star when it comes to low-cost ETFs, which are similar to mutual funds but trade during market hours like stocks. In addition to $0 trades on ETFs, Schwab offers more than 150 ways to analyze ETFs via its proprietary StreetSmart Edge software. It also allows customers to research and compare stocks, ETFs and mutual funds simultaneously, which is a feature unique to Schwab. Like the other best investment companies, Schwab offers customers access to its proprietary index funds and offers more than 500 funds with expense ratios of 0.50% or less.
The biggest knock on Schwab is that you’ll make just 0.48% APY on your uninvested cash, which is low. Its robo-advisor, which did not make our list of the best, keeps an outsized portion of your portfolio in cash.Schwab paid $187 million in 2022 after . Due to the low-interest rate offered to those customers vs. what Schwab can earn on the money, Schwab has been able to make profits. But that’s one reason Schwab was able to move to $0 commissions. Clark likes , which requires a $25,000 minimum investment. It charges a one-time $300 fee for financial planning and then $30 per month after that. This plan invests your money via a robo-advisor but gives you unlimited access to Certified Financial Planners. However, Schwab makes it difficult to understand the true cost of Intelligent Portfolios Premium. Those who invest close to the minimum amount pay exorbitant annual fees.
- Known for low-cost funds, ETFs
- No-nonsense approach
- Investment minimums fairly high
- Website, app and customer service lag behind
|$0||Stocks, ETFs, Options, Mutual funds, CDs, Bonds, Metals||Taxable, Retirement, Trust||No|
Clark Calls Out Vanguard Customer Service
Clark has been a customer of all three of these companies for decades. But he has 耀竣金融配资_在线配资炒股:called out Vanguard on his podcast for lackluster customer service. He specifically noted the company’s heavily criticized app as well as customers having difficulty getting representatives on the phone.
“I love Vanguard. I’ve been a customer of Vanguard for decades. But the customer service has got to become a focus.
“[Vanguard,] you’re a little errant right now. You’re off the path. If you’re going to continue to be the company of the future and not the past, you’ve got to get this together.”
The Details: Vanguard has earned a reputation as the low-cost index fund superstar, and it’s easy to understand why.For starters, Vanguard founder Jack Bogle invented index funds. The company also offers more than 3,100 mutual funds with zero transaction fees and a large number of proprietary low-cost index funds. , its average expense ratio for mutual funds and ETFs was 0.08% as of the end of 2021, the lowest of any brokerage firm and well below the average of 0.49%. The company got rid of commissions, announcing free trades on equities like stocks, in early 2020.
Vanguard is an ideal place to follow Clark’s two primary investment recommendations: Put every dollar into a target date fund or buy three index funds (total stock market, international and bond).Self-directed investors who use a low-cost, well-diversified buy-and-hold strategy have loved Vanguard for decades, as evidenced by its as of May 2023.
7 Reasons To Choose a Different Investment Company OptionThere aren’t a lot of reasons to choose a firm other than Fidelity, Schwab or Vanguard. But you might consider investing through another brokerage if you’re interested in any of these seven things:
- Fractional shares. You can achieve portfolio diversification through a target date fund. But if you really want to invest in individual stocks, buying fractional shares is an affordable way to own small pieces of many companies. Vanguard doesn’t offer fractional shares at all, and Fidelity and Schwab’s offerings are more limited than some competitors.
- Options trading. You can do this with the Big Three, but there are better, more specialized brokerages for options trading. Clark does not think options trading is a good idea. Options trades are complex, risky bets on the market that can easily lose money even for experienced investors.
- Day trading. Everything I wrote about options trading also applies to day trading.
- Cryptocurrency. If you want to directly trade Bitcoin or buy fractional shares of specific cryptos, you’ll need to look elsewhere. Clark 耀竣金融配资_在线配资炒股:discourages investing in cryptocurrency.
- Individual international stocks. A target date fund will give you a diversified portfolio that includes exposure to international markets. But if you want to invest in some specific international stocks outside of your core portfolio, you may need to look elsewhere.
- Robo-advisors. Clark recommends two robo-advisor hybrids: Schwab Intelligent Portfolios and Vanguard Personal Advisor Services. They require $25,000 and $50,000 minimum investments respectively. If you want a robo-advisor with low (or no) minimums and robust planning tools, you may want to consider other options.
- Better mobile apps. If you want your brokerage to include a top-notch mobile app, there’s a good chance you’ll need to invest with a different company.
Other Investment Companies in 2023
Best Investment Company for Fractional Shares & Cryptocurrency, Best Mobile App:
- Simple, fast and easy
- Fractional shares trading available even for crypto
- Competitive APY on uninvested cash
- Frequent site outages
- “Gamification” culture can lead to bad habits
- Limited research and screening tools
The Details: If the goal is to generate as many headlines and opinions as possible, Robinhood is a clear winner.
The company sent shockwaves through the industry in 2013 when it became the first brokerage to offer free trades. It also has faced 耀竣金融配资_在线配资炒股:a litany of controversies, including aggressive PFOF, extended platform downtime during peak trading days and few guardrails for the millions of new investors attracted to its ease of use and the way its app “gamifies” the stock market.However, Robinhood has taken simple elegance to the extreme with its app. That’s only one reason it appeals to investors who are just getting started and don’t have a lot of capital. The others: no minimum deposit, free trades, the most robust fractional shares program that I’ve seen and the ability to trade up to $1,000 instantly before your deposit has even cleared.
Clark is not a fan of cryptocurrency such as Bitcoin: He compares it to betting in a Vegas casino rather than investing. But if you’ve built a strong core portfolio that follows his advice and you’d like to dabble in cryptocurrencies such as Bitcoin with some money you aren’t worried about losing, Robinhood probably is your best option.You can buy as little as $1 in Bitcoin on Robinhood’s platform. And unlike other crypto exchanges, you don’t have to fuss with “wallets” that require passwords and .
Best Investment Company for Options Trading:
- Specializes in options trading, including tools
- Low trading fees
- Good options-focused educational material
- Options trading is risky
- Lacks advanced order types
- Limited products
The Details: As a reminder, Clark doesn’t recommend options trades. They’re risky and complex. Much like betting, it’s possible to win, but it’s also possible to lose big. And if you’re not an expert, you could lose big often.
Best Investment Company for Day Trading:
- Tools cater to active traders
- Trading tech may be industry’s best
- 40+ years of historical data great for back-testing
- Must meet monthly minimum trades to avoid fees
- Day trading is risky
- Many features are too advanced for beginners
The Details: Clark also doesn’t recommend day trading because of its high risk level.Like most brokerage platforms that cater to day traders, TradeStation lacks strong fundamental company research and educational materials. Day traders need their own complex systems that include software and data, and TradeStation is consistently lauded as one of, if not the, best in the industry on that front. Charting (technical analysis) is critical for some day traders. Without getting into great detail, as Clark thinks day trading is a bad idea, TradeStation is loaded with the types of features that can satisfy even the most demanding day traders.
Best Investment Company for International Stocks:
- Access to large number of international markets
- Strong order execution protocols
- Good platform for most retail investors
- Trading international stocks isn’t free
- Tools and research are only adequate
The Details: Do you want to trade around the world and around the clock? It’s unnecessary, but Interactive Brokers makes it possible. The investment firm gives customers access to stocks, options, futures, bonds and currencies from 150 international markets. You can invest in more than 48,000 mutual funds, many of which include zero transaction fees.Again, it’s much simpler to get exposure to international stocks through a target date fund or through an international index fund. But if you know what you’re doing, it’s not necessarily risky to diversify through a set of individual international investments. If you want to go that route, Interactive Brokers is probably your best option. It offers free trades on domestic stocks. But its “Pro” plan is set up for professionals who want to trade internationally. Its pricing structure is complex, but basically, customers pay up to $0.005 per share on international trades with a minimum of $1 per trade. That can be great value for high-volume orders on equities that can otherwise be unreachable for U.S.-based investors.
Best Robo-Advisor, Part I:
- Low fees and minimums
- Easy to use
- Strong goal-based platform
- Wide range of portfolio customization
- No REIT or commodities trading
- Less sophisticated tax-loss harvesting
- Emergency fund strategy not in line with Clark’s principles
The Details: 耀竣金融配资_在线配资炒股:Betterment, a pioneer in the rob-advisor space, is ideal for most retail investors, starting with its fees and minimums. The company charges customers an annual fee of 0.25%, which is below average for a robo-advisor. There’s no minimum deposit. Its weighted average expense ratio is 0.11%.
A also pays 4.58% APY on your uninvested cash as of May 2023, which is quite competitive with 耀竣金融配资_在线配资炒股:the best online savings accounts.
Best Robo-Advisor, Part II:
- Low minimums and fees
- Strong free financial planning tools
- Strong tax-loss harvesting strategy
- Portfolios under $100,000 aren’t very customizable
- Lack of fractional shares trading, portfolio balance requirements leads to uninvested cash
The Details: Wealthfront’s hard numbers are similar to Betterment: a 0.25% annual advisory fee, a weighted average expense ratio of 0.08 to 0.11%, a $500 minimum deposit and that offers 4.55% APY as of May 2023.Those are good, but you need to look past the numbers to fully appreciate Wealthfront’s value. Wealthfront’s portfolios offer relatively low risk even compared to other good robo-advisors. is among the most advanced. You can use its free, customizable, user-friendly financial tools whether or not you invest a single dollar with Wealthfront.
耀竣金融配资_在线配资炒股:Wealthfront offers investment models for five different goals: funding retirement, paying for college, buying a house, making a large one-time purchase and taking extended time off work to travel. It also offers a separate model for windfalls such as a lump-sum inheritance.The robo-advisor is still working on a “Self-Driving Money” feature, but it seems promising. It intends to take your paycheck and automatically allocate it to paying your bills, saving, investing and optimizing the amounts based on your goals.
How To Choose the Best Investment Company for YouThere are numerous factors to consider when picking the investment firm you’ll use to manage your portfolio. Rather than suffering from “paralysis by analysis,” do what Clark does: prioritize the fees. Here’s an idea of the fees you’ll pay depending on how you choose to invest.
Self-Directed: Look for a target date fund or a mix of index funds (total stock market, international and bond) with an expense ratio of 0.10% or less. There’s also no need to pay a commission to trade stocks or ETFs in 2023.
Robo-Advisor: There are plenty of good robo-advisors that charge annual fees of 0.25% or less. If you’re going to use a robo-advisor that charges more, make sure you’re getting additional features. For example, Vanguard’s Personal Advisor Services charges 0.30% but gives you unlimited access to a Certified Financial Planner (CFP).
Financial Advisor: Most reputable sources cite an industry benchmark of 1% annually. It can be hard to pinpoint a “good” fee level for a financial advisor. First, make sure that the person you’re considering is a CFP and therefore has a fiduciary duty to act in your best interests.Beyond fees, here are some other things you may want to consider:
- Minimum deposit amount
- Asset classes available (stocks and bonds, for example)
- Account types (retirement accounts like IRAs, for example)
- Ease of use (website and app)
- Research tools and data
- Educational resources
- Customer service
Clark Howard’s Investing AdviceClark often describes his investment style as “dull.” The truth is that smart, successful people have been investing in “boring” ways for decades. True investing isn’t like putting all your money on red at the roulette table in Vegas. Yes, there’s risk involved. And yes, you could theoretically lose some or all of your money in any investment. But the proven way to invest well for retirement is to achieve modest, relatively stable gains over a long period of time.
Clark’s favorite investment recommendations are target date funds. Every major brokerage offers them including Fidelity, Schwab and Vanguard. Pick the year closest to when you expect to retire: That’s your target date. The fund manager will change the allocation of the fund as you get closer to retirement, reducing your risk by holding less of your portfolio in stocks.Back to the casino metaphor: Trying to time the market is much like gambling. It can be fun, especially if you win. But more than likely, your result will be based on nothing more than luck. Clark suggests “,” which is a fancy way of saying you should contribute new money to your investment portfolio at regular intervals rather than putting in a one-time lump sum.
Formulating a good investment strategy is just as important as picking the best investment company.Just remember that it’s OK to be boring with your investments, as Clark has advised many times.
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