Folio Investing

Both Lending Club and Prosper use a brokerage house named Folio Investing to manage the trading of notes. When you want to buy or sell notes, you are redirected to Folio’s web site. The site is customized for each of the two, but they are very similar. The first time you go to Folio’s site they will establish an account for you with them. So we already have two accounts with Folio.

While looking at Folio’s web site, FolioInvesting.com, I found some interesting things. They are a regular brokerage firm with a few twists. You can open the standard variety of accounts with Folio. But there are several things in particular that I liked.

First they offer free trades for a flat monthly or annual fee. When I looked at my Fidelity account I was surprised that I spent a couple of thousand dollars on commissions in 2014. I believe Folio’s annual fee is $300.

You can enter marker orders anytime, but they batch them and execute them at 11 AM and 2 PM. I suspect this allows them to match these internally and reduce the volume that they have to go to the market for.

They encourage bundling stocks in portfolios. They allow fractional shares. So if you want to add funds to a portfolio, it will be distributed in fractional shares. This could be useful in rebalancing.

Finally they offer some predefined portfolios. Just looking at the rational and methodology of some of these makes me think that using these would be of interest.

I am going to open an account with them to fully understand how they work.