Millennials, 3 investment accounts that you need now
An unbiased review to help you not get bent over a barrel (are we still using this phrase in 2020?)
Let’s face it, you’ve put off opening this type of thing for every second of your entire life.
You don’t care how many E*Trade commercials they run or how many times Uncle Dave talks about stocks (or more likely, talks down to you about “being just another stupid millennial who doesn’t know anything about investing”). Well, fuck that guy, and the industry that has literally been a minefield of exploitation to the unassuming consumer (that would be you and I here).
Why do you need this? Pretty simple.
By now you’ve hopefully switched to a better checking & savings account (ref my other articles, or go switch to Consumers Credit Union for your checking and Froogal.us for your savings) so you’ve at least got the foundation set.
Truth be told though, a checking and a savings account are never going to make you rich (maybe “rich” spiritually, if you’re into that, but certainly not as it pertains to that private jet/non-stop party life all the movies display).
As this is the case, you’ll need a different, yet astoundingly simple, strategy to give you a far better shot of having 7 figures in your bank account one day (that’s a million dollars +, for the slower readers out there).
This comes in the form of a brand new investment account, which will allow you to, well, invest.
I’ll bore you to death in a follow-up article on the next step after opening this son of a gun (spoiler: it’s to buy market index funds), but let’s be real for a second, you’re maybe going to do about one productive thing today (this month) so opening the account is about as much as you care to handle.
Keeping it simple, here’s what we’re looking for in an investment account:
Decent website & app
Mutual funds available to purchase
Simple process to purchase investments
That’s about it. Surprisingly, that’s been a tall order in the industry for a few decades but most of the dinosaurs are starting to evolve.
1. Schwab Individual Investment (Brokerage) Account
Out of the gate, I will proclaim that any of these options would be a solid start for you (as something is better than nothing), so don’t read too much into the ranking this time around (if you’ve read my other articles, I typically lead with the best).
Schwab is a solid choice for any starter and has been a staple in the industry for quite some time. With them, you will get:
Zero fee trading (for the most part, some options that you should never select do cost money)
Solid website and app
Solid customer service
NO Fractional trading (fancy jargon for, you can buy any a tiny bit of almost any stock/mutual fund) — BAD NEWS
They also don’t appear to be planning to offer this anytime soon. (https://www.investmentnews.com/schwab-fractional-shares-advisers-176734)
Mutual funds available for purchase (this is where all of your money should be going for the most part so it’s important that they have it)
Relatively simple purchasing process (honestly, it’s pretty technical feeling for an amateur and can be intimidating even for seasoned investors, but after your first few attempts, you will get the hang of it)
Overall, not a bad option and should certainly be considered.
They lean heavily into offering you tons of investment details (certainly helpful, but let’s be real, you’re never going to use/read/look at any of it) so I personally don’t weigh that into this decision. But if you do, that would be another pro for Schwab.
*Last note, they recently purchased TD Ameritrade so stay tuned to see how well they innovate going forward
2. Robinhood Investment (Brokerage) Account
Option 2 is a personal favorite because they are the most likely to disrupt the space. They already caused enough damage with their “zero commissions stock trading” (now just about every major player has followed suit) mantra but I expect more to come.
Robinhood was a mobile-first play and has continuously added more stock information and investment options over time.
Zero commission stock trading
NO mutual funds (but they do have ETFs)
In my opinion, this is the last piece they are missing before they garner my undivided recommendation.
Very simple process to purchase investments
No fractional trading (for now, they’ve stated it’s coming in 2020)
Overall, a great “first investment account” option to have but I’d still stick with Schwab until they add mutual funds and get the fractional share capability added.
3. Fidelity Investment (Brokerage) Account
Admittedly, this is the platform I have the least background with of the three.
That being said, Fidelity is an all-around solid option (I’d say on par with Schwab just to make your decision a bit harder).
Zero commission trading
Mutual funds + Mutual funds with a zero expense ratio (jargon for most, but it’s a good thing)
Solid website & app
And is equally as complicated to purchase stocks as Schwab
Fractional shares (yes! one of them has it!)
They are also known for their “extensive research” but again, I highly doubt you are going to do a deep dive into this (or that it would help that much, to begin with) so I don’t give this too much weight personally.
Additionally, their website can be somewhat difficult to navigate for first-time investors (just like Schwab again) so be prepared for a little struggle before you figure it all out.
Lastly, skip their “cash management” option. Not worth it.
I’d recommend Fidelity for now but leave the door open to Robinhood for down the line.
Almost all of your investing will be going into market-index mutual funds so the zero expense ratio and fractional trading will be perfect.