Final thoughts on Lending Club and Folio Investing

There were two more test accounts, Folio Investing and Lending Club. Folio Investing is a broker dealer with some unusual characteristics. They offer cheap trades as long as you are willing to have the trades made during their trading windows, 11 AM and 2 PM. The trades are cheap if you make a high volume of trades. This will likely happen because you keep stocks as a group in separate folios and generally trade them as an entity. They also have many Ready to Go (RTG) folios which are groups of stocks with a common thread. Since the makeup of these change regularly, this also increases trades. They do offer an annual fee of $290 which gives you lots of trades. But this makes it expensive for small accounts.

Folio Investing is fun for those who like to trade stocks. If I were younger, this would be something that would intrigue me. But, I’m attempting to put my investments on auto pilot, hence my interest in robo-advisers. I am going to add funds to this account for the short term in an effort to get some above average growth. But I’ll pull the funds out later in the year and close the account.

I included Lending Club as a test account when in reality it wasn’t. I had opened two small test accounts with Lending Club and Prosper and chose Lending Club over Prosper. I then opened an IRA with Lending Club (actually SDIRA) and rolled over $10,000. This is the account I’ve been reporting on weekly. It’s been successful. I certainly will keep this account and in fact plan on rolling more money into it.

Well, this concludes the experiment with the test accounts, and likely the blog. It has been instructive, interesting, and a lot of work. But I’ve accomplished my objectives. I hope it’s been useful to at least a few people. Obviously, I will be tracking the performance of these larger accounts on a weekly basis for personal reasons. If you have interest in these results, Email me at bill.lanke@gmail.com.

Final thoughts on robo-advisers

Even though I’m not going to be doing the weekly updates on the test accounts, I will keep them open for a while to park cash until it is needed for a new house construction project. They will be closed before the end of 2015. I don’t want to have to do the tax reporting for these in 2016.

Three of the five test accounts were robo-advisers, Betterment, Wealthfront, and Schwab Intelligent Portfolios (SIP). I discussed Wealthfront in a previous post when I closed that account. I really like Betterment. In fact my wife and daughter have opened accounts there. Betterment is a good choice for investors wanting to start with relatively small amounts. Their use of fractional shares facilitates reinvestments in these accounts. I can’t think of anything negative about Betterment.

Schwab Intelligent Portfolios (SIP) came late to the fray, but has performed well. They’re so new, the web site still has some functions missing. There also has not been any transactions since the initial investments. SIP does deal in whole shares which makes reinvestment a bit more difficult. Although since they do hold cash in the account this should be a little easier. It’s possible that SIP’s software is yet ready.

I plan on adding funds to both of these accounts and letting them run for the next few months. I will be closing these cash accounts later in the year. I will also open an IRA with one of these robo-advisers and rolling over some funds. I’m not sure which of the two I’ll choose.

Next some thoughts on Folio Investing and Lending Club.

Final Test Accounts Update

This is the final update for the test accounts. These were created in January to learn about some investment alternatives. That has been accomplished. Having the accounts allowed me to understand how they functioned operationally. It also gave me a chance to see how the funds were invested. I did publish the weekly performance of each account. This was done more as a curiosity then a decision criteria. But having said that, I can’t help to keep from comparing the results.

All of the test accounts outperformed the S&P 500 index for the period. The index gained 3.9%. Folio Investing gained 5.0% over the period (not including the annual trading fee). Schwab Intelligent Portfolios gained 4.7%. Betterment was up 4.0%. Finally, Lending Club matched the S&P 500 at 3.8%. It should be pointed out that Schwab and Lending Club had a shorter period to earn their results because they started later than the others.

Although this is the final update, I do plan a couple of more posts summarizing my feelings on these accounts. I’ll indicate when these posts are made on Twitter @billlanke.

W/E	S&P 500	BTRMNT	FOLIO	LND CLB	SCHWAB
16-Jan	-1.2%	0.0%	-0.2%	0.0%	-0.2%
23-Jan	1.6%	1.1%	2.0%	0.0%	1.0%
30-Jan	-2.8%	-1.5%	-2.0%	0.0%	-1.3%
6-Feb	3.0%	1.0%	0.9%	0.0%	1.3%
14-Feb	2.0%	1.0%	1.8%	0.0%	1.2%
21-Feb	0.6%	0.6%	0.5%	0.0%	0.4%
28-Feb	-0.3%	0.2%	0.3%	0.7%	0.0%
6-Mar	-1.6%	-1.6%	-0.9%	0.3%	-2.1%
13-Mar	-0.9%	-0.1%	-0.6%	0.2%	-0.7%
20-Mar	2.7%	2.1%	0.6%	0.2%	1.0%
27-Mar	-2.2%	-1.0%	-2.3%	0.3%	0.5%
3-Apr	0.3%	0.6%	0.0%	0.3%	0.8%
10-Apr	1.7%	1.2%	2.5%	0.3%	1.3%
17-Apr	-1.0%	-0.3%	-1.5%	0.3%	-0.3%
24-Apr	1.8%	1.0%	1.9%	0.3%	1.0%
1-May	-0.4%	-0.8%	-3.5%	0.3%	-0.6%
8-May	0.4%	0.1%	1.2%	0.2%	0.4%
15-May	0.3%	0.5%	1.5%	0.3%	0.7%