UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: lewellen180 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 83  
Subject: Re: Folio Fees for the small investor Date: 12/15/2003 11:53 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
***
If you go with just one folio instead of three, the cost is less. It's $19.95 per month or $199 per year. There's a number-or-trades limit also. I find one folio to be plenty. Even so, I think you'd want about $25K to do folio(fn).

There's also a "pay-as-you-go" option costing $4.00 per trade. That's per stock not per folio. Good if you don't make many trades.
***

I had switched from BUYandHOLD to FolioFN about a year ago (due to poor service). I really like a lot of Folio's features, including of course the dividend reinvestment and the multiple-folio features; it makes keeping track of things much easier, in my opinion. So, this year at renewal time, I decided to switch to BrownCo.

Why?

Two reasons.

First, and foremost in my thinking, was the fee structure. I had at the time of the switch (still do, for that matter) about $16k invested. $300 per year out of ~$16k is on the order of 1.9% - a heck of a yearly "management" fee. Even if I slimmed down to a single Folio, I'd still be talking on the order of 1% ... and the fees are going up next year. BrownCo costs me $5 a trade, so I'd have to make four (for the 1-folio option) or six trades per month before it made sense to stay with Folio.

Now look at it on the effective-commission side. If I devote about $300 / month to my non-retirement investing, I can also look at the FolioFN fee as the equivalent to a conventional brokerage commission as opposed to a management fee; in that case, I wind up paying 10% (or 5%) brokerage commissions! If my per-trade fee is $5, the commission rate is 1.667%. Much better, if I only trade once per month. I still win if I trade twice per month, albeit 3 1/3% is getting high for my taste.

Second, I find I like buying stocks. I treat (non-retirement) investing as a hobby, which is fine - to a point. The problem is, I find FolioFN to be very seductive ... you know, the "Oh, what a neat idea ... did some research ... yeah, that has real possibilities" method of investing. (Yes, I know, I know; for what it's worth, my day job is a research scientist, so I have some idea what's BS when I read a prospectus for a small research firm, even if it's not precisely my field.) So I found myself with a mess of micro-positions on the order of $50 or $100, as well as some substantially larger positions. Not good; and even worse as the portfolio itself grows large enough to, say, be worth a car or a couple of motorcycles (my other hobby).

The per-trade commission, I find, is making me more honest. I might still trade more than once or twice per month, but I make sure to do it with large enough sums as to make it worthwhile. And it forced me to do some serious housecleaning and thinking. If WhizBangCorp (KAZAP) doubles, great; if it's only 0.6% of my portfolio, I have the same problem as Warren B. trying to improve Berkshire Hathaway's returns ... albeit on a far smaller scale. :-) Bottom line, if I'm not confident enough in KAZAP to invest a significant chunk of my portfolio to it, I won't invest in it at all. And that, really, is the place I want to be, investing-wise.

I have nothing but fond memories and good service of FolioFN; I found their customer service was great and the service itself was pretty neat. It was also a lot of fun ... which was part of my problem, of course.

Of course there's a minimum buy-in of $15k to open a BrownCo account also, so my solution won't work for everyone, especially not new investors. What might work, however, is to start out with a decent index fund, or DSP/DRIP stock, and continue until you have a large enough stake to make a brokerage worth your time and resources.

Good roads,

- Lewellen180
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement