Zecco Review: a Broker for the Masses

Zecco reviewAs an investor, you need an account with a brokerage to gain access to the financial markets. When choosing a broker, you definitely have a lot of options to consider. Some brokers are better than others and the quality of your broker can make a big difference in how successful you are as an investor. One of the leading brokers in the industry today is Zecco. Zecco offers a lot of features at prices that are superior to what you will find with other brokerages.

A Top Discount Broker

Zecco is considered to be a discount broker because of the cheap rice is that they offer on commissions. With many brokers, you have to pay a fee that is based on a percentage of how much you are trading. With Zecco, you pay one flat fee regardless of how big the order is or your account size. When you buy regular stocks with Zecco, you’re only going to have to pay a flat fee of $4.95 for each trade. This is definitely on the low-end of the market and is quite a bit cheaper than some brokers.

While you pay $4.95 for regular stock trades, you will have to pay a little bit more than that if you want to get involved with penny stocks. For penny stocks, the commission is $6.95 per trade. This is because penny stocks offer a little bit less liquidity and are somewhat harder to come about in the market. In addition to offering stocks, they also offer access to options for a flat fee of $.65.

If you are the type of investor who likes to trade frequently, Zecco is definitely one of the best options in the industry for you to consider. If you were to choose one of the more expensive brokers, the extra commission that you would pay could cut into the amount of money that you have available to trade. This means, you’ll end up buying fewer shares and spending more on brokerage fees. With the power of compound interest, you need to get as much capital invested early on as you can. By using Zecco, you give yourself the best chance to succeed over the long-term.

What You Can Buy With ZECCO

Obviously Zecco gives you access to the stocks that are traded on the major stock exchanges and those that are considered to be penny stocks. However, you can also put your investment capital into other things like ETF’s, mutual funds, bonds, commodities, CD’s, precious metals and even Forex. This gives you a lot of flexibility in what you can invest in and helps you diversify your portfolio. A lot of other brokerages only give you a few limited options like stocks and bonds.

If you don’t have quite enough cash to buy a security, you can keep the leftover in a money market sweep account. This makes it possible to earn a decent return on the money that you have just sitting in your account. It’s a little bit better than what you could earn from a regular savings account.

Doing Your Homework

If you are going to invest with Zecco, or any other brokerage for that matter, you’re going to need to do some research on investments. You can’t simply pick an investment at random from a list and hope to have a realistic shot to make a decent return. Luckily, Zecco offers a number of tools that you can use for your investment research needs. For example, you can use their investment screener to narrow down your options based on specific criteria that you list. They also provide you with access to an options calculator so that you can quickly compute the value of an options contract to you.

Educational Resources

In addition to the research tools, they also offer a number of educational resources that you can turn to when you don’t understand something about the markets. They have detailed tutorials that help you learn the basics of investing so that you can make more informed decisions in the future.

Technology

One of the cool things about Zecco is that they have invested some money in technological advancements so that you can trade easier. One example of this is the Zap Trade feature that they offer. Zap Trade is a plugin that you can download for your Firefox Internet browser. Once you are signed into Zap Trade, it makes it possible for you to place a trade directly from your browser without even navigating to the Zecco site. The plugin even scans the page that you’re on for stock symbols. If there is a pertinent stock symbol, it can look it up in the Zap Trade interface so that you can place a trade easier. This can come in handy if you happen to be reading a piece of financial news and you’re interested in investing in a company or getting a stock quote.

Another example of the technology that they provide is their Zecco iPhone app. With the Zecco iPhone app, you can do research, get quotes, place trades, look at charts and do many other things that you could do on your computer. If you are on the go quite a bit, this can be an invaluable tool to have at your disposal.

zecco iphone app

Considerations

Zecco puts an emphasis on customer service and making sure that your funds are safe. They are a member of FINRA and they also offer a feature known as a “trade key.” When you login to your Zecco account, you have to enter this trade key before you can place a trade. This makes it possible to prevent anybody who does not need access to your account from placing trades.

If you are looking for a broker and you don’t want to spend a lot of money on trades, Zecco is one of the best in the industry. You can save money on the costs of your investing and help yourself gain access to all of the investment options that you may need access to.

 

zecco broker review

Is OptionsHouse the Best Option Broker?

options house reviewOptionsHouse is a brokerage that has been around for a while. It was founded in 2005 by PEAK6 Investments, LP and it has the advantage of the PEAK6 professional trading platform technology. PEAK6 has been around even longer and was named one of Chicago’s 101 best and brightest companies to work for. Even though the software is advanced, the beginner option trader can use the trading platform because it is relatively easy to learn. This options brokerage is SIPC insured so you can have peace of mind when you deposit your money with them.

Why Is OptionsHouse So Popular?

Depositing and Withdrawing from My OptionsHouse Account

When you first deposit money with a broker you will probably want to trade right away. OptionsHouse accepts wire transfers so you can get trading right away. What about nasty fees that banks charge for wire transfers? No problem, OptionsHouse will reimburse your wiring fee for the initial deposit. Initial minimum funding is only $1000 for a cash account but if you want to trade on margin, the minimum initial deposit is $2000. Make sure you use the wire reimbursement code, WIRE25REFUND. It’s also easy to take a withdrawal. If you sent money via wire, you can withdraw the next business day. If you used an ACH transfer, it will take a little longer because the funds have to settle in your account before they are allowed to release them. So just keep that in mind when you are getting ready to withdraw. Also remember that if you sell stocks, the sale takes 3 days to settle before cash is in your account. Then you will be able to withdraw pretty easy by wire, ACH or physical check. There is no minimum account balance so you don’t have to worry about getting charged if your account drops below a certain amount.

What Can I Trade In My OptionsHouse Account?

Options and Stock Trading with OptionsHouse

OptionsHouse allows you to trade stocks, ETFs and of course options. They also offer mutual fund investing and free DRIPs. A DRIP is a dividend reinvestment plan. When you receive cash dividends in your OptionsHouse account, based on your choice, they will automatically reinvest that dividend without charging a trading fee. Reinvesting dividends allows your investment to compound over time. There are several options for trading options. You can trade weeklies, quarterlies and the standard monthly options as well as LEAPs. If you decide to open an IRA with OptionsHouse, you have several trading choices. Once your IRA account is approved and funded, you can buy shares of stock and buy call and put options. You can also sell covered calls and cash-secured puts.

What are OptionsHouse Fees?

Low Commissions and no Hidden Fees

With all of these features, you would think that OptionsHouse charges the same as a full service broker. Well the good news is that although you will get the service and attention that a full service broker would give you, you won’t have to pay an arm and a leg to get it. OptionsHouse is a discount broker that offers stock trades for as low as $3.95. Need to call a broker to place your trade? That’s also only $3.95. There are many brokers that charge upwards of 20 dollars for broker assisted trades. For options trading, up to 5 contracts are only 5 dollars. For more, there is a flat fee of 8.95 plus 15 cents per contract.

OptionsHouse Account Types

Pratice accounts, IRAs and Individual accounts

  • Individual
  • Corporate
  • Roth IRAs
  • SEP IRAs
  • Traditional IRAs
  • Joint
  • UTMA
  • UGMA
  • Trusts
  • Partnerships
  • Investment Clubs
  • Educational IRAs

Ready to switch? They will cover any account closing fees that your old broker might charge.  Start your investing journey with Options House today! Options involve risk and are not suitable for all investors. In addition, electronic trading poses unique risk to investors. System response and access times may vary due to market conditions, system performance and other factors. OptionsHouse provides neither investment nor tax advice. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (ODD). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS , or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606.

Betterment Interview With CEO Jon Stein

jon stein bettermentYou may have seen Betterment.com ads around this blog before.  In fact, I have one up on my sidebar right now.  Betterment is one of the few companies that I support and recommend all my readers to utilize in their total financial portfolio.

I was approached a while back to interview Jon Stein and took the opportunity to do just that!  I had the chance to ask some deeper questions than usual.  Jon Stein was a pleasure to interview and I love his passion for helping average Americans!  But first, here’s a short snapshot of his background from Betterment.com:

Jon is the Chief Executive Officer of Betterment, which he co-founded in 2007. Prior to creating Betterment, Jon spent his career developing better financial products, platforms, and investment strategies for international banks, brokers and other financial institutions.

At First Manhattan Consulting Group, he counseled a number of the world’s most prominent financial institutions on issues ranging from product design to strategies to mitigate the risks inherent in their products. Jon is a Chartered Financial Analyst (CFA), a Series 7 and 24 Registered Securities Representative, and a graduate of Harvard University (Economics) and Columbia Business School.

He has appeared on NBC, Bloomberg, and Fox and quoted in the New York Times, CNNMoney, and Investment News. His interests lie at the intersection of behavior, psychology, and economics. What excites him most about his work is making everyday activities and products more efficient, accessible, and easy to use.

Hopefully this Betterment interview gives you some more insight as to what Betterment is about and how their services can benefit you and your retirement goals.  Sit back and enjoy the following interview!

Hi Jon, thanks for this opportunity to interview you! I’m a huge supporter of what you’re doing over at Betterment.com.  But first, tell us your quick background story. How did you get to where you are today?

At Harvard, I studied psychology and economics. So I’ve always been passionate about helping people make smart decisions with their money.

When I graduated, I had a little cash and I wanted to invest it. My first purchase? Enron. I knew better, and still I didn’t follow the best teachings of modern finance â“ diversifying, re-balancing, indexing.

Then, I spent years working as a consultant for big banks, and found that typical financial products were optimized for corporate profits, not for real people’s goals. Friends would ask me, What should I do with my money?❠Seeing no good answers, and knowing that Wall Street was not looking out for the average individual investor, I felt I had to create a better way.

 

What is the history of Betterment.com? How did it start and what has the journey looked like up to this point?

In 2007, I left my cushy banking job and enrolled in the MBA program at Columbia. I knew I wanted to start a company â“ Betterment â“ I had the name already â“ but the details were still taking shape.

In August 2008, I brought in a few great colleagues who were experienced in financial services, technology, and law. So began our 2-year journey through regulators and technology. We actually finished our site a day before we launched to the public â“ it was down to the wire. We officially launched at Tech Crunch Disrupt in May 2010, where we were voted Best New York Start-Up.

Through my education and in working with large financial institutions, I learned a few things, one of which was that I was no smarter than thousands of others looking at the market, and I didn’t have better information. I was best off applying the concept of Modern Portfolio Theory â“ that there’s no better portfolio to own than the market portfolio â“ than trying to beat the market. So the principles of Betterment were in place long before we had a product.

 

What is the vision for Betterment?

Betterment’s vision is to make smarter investing accessible to hard-working, busy people like you and me â“ to make Wall Street work for the rest of us.

 

What is the structure of Betterment and why do you recommend it to the average American?

Betterment is smart investing made easy. We blend the simplicity of an online bank account with the higher long-term returns associated with investing in stocks and bonds. You can quickly and easily transfer money from your checking account by linking it to Betterment electronically. There are no minimum balances, no transaction fees, no holding periods, and no hidden costs. You’ll just pay a low annual management fee of 0.3% â“ 0.9% of your average balance.

As far as your portfolio, you’ll be invested in a blend of stock and bond Exchange Traded Funds (ETFs). With stocks, you’re invested in index funds that are chosen to reflect the U.S. economy as well as some select markets around the worldâ”it’s like owning a little piece of every company in America and then some. Your bond investment is made up of U.S. Treasury bond ETFs that are backed by the U.S. Government. You get to choose a blend that gives you the broadly diversified portfolio that’s right for you. We’ll also automatically rebalance the allocation you set in order to maximize your returns.

The coolest thing about our structure is that we are both a broker/dealer and a registered investment advisor. Because of this we can provide people with sound financial recommendations and the tools to implement those recommendations all in one platform. In just a few clicks of the mouse, your assets can be broadly diversified and invested toward your long term goals. And each of your goals can have a different plan. You set the timeline and asset allocation for each, and we advise you on how much to invest to make your goals reality. Whether you are investing for retirement or saving for a house â“ or both â“ we have you covered.

The other awesome thing is how efficient our platform is, since it’s all automated and built on the latest technologies. We pass the savings on to customers.

It’s the best way to invest â“ the highest risk-adjusted returns for the lowest cost. You save a bundle versus paying brokers to do all this stuff for you, and you don’t pay some guy in a suit to give you so-called advice.❠You invest in a smart way with tens of thousands of people like you. What could be better?

 

What are the choices for a typical investor?  Can you give us a brief synopsis of how a typical investor would go about starting an account and getting started?

Starting an account at Betterment could not be simpler (or faster). All you do is link your checking account, set your asset allocation using a slider, and then relax and let your money grow. There is no minimum balance and no paperwork to fill out. In about 5 minutes you can start your journey to become a better investor.

 

Is there any catch❠in terms of fees or trading costs?

At Betterment there are no transaction or trading costs and no hidden fees. All you pay is a low annual management fee of 0.3% to 0.9%, depending on your balance. For a balance like $100,000, the annual fee is $750, which is far less than folks pay for in-person advisory solutions, and all the execution is included.

 

For the readers out there, what type of protection do you provide investors in terms of insurance?

Betterment is an SEC Registered Investment Advisor, and Betterment Securities is a broker-dealer regulated by FINRA and the SEC. The securities in your account are protected up to $500,000 by SIPC. Betterment is simple and transparent. Your money is invested in well-established funds, chosen for their good management, efficiency, and long track records.

 

What mistakes do you see investors make and how does Betterment help investors avoid these mistakes?

Some common mistakes that come to mind are buying when the market is low and selling when it’s high, remembering our winners and forgetting our losers, and failing to adhere to good investment practices like re-balancing and dollar cost averaging.

Through our platform, we encourage our customers to invest for the long term. Accounts are based on goals and we ask for specific time lines to those goals. By focusing on long term investing, we steer customers away from trying to beat the market and from those irrational daily impulses. In addition we automatically re-balance all customer portfolios every quarter or any time an asset allocation moves 5% away from its target. And finally, we offer automatic deposit which allows customers to take advantage of dollar-cost averaging. By making automated, regular contributions to your Betterment account, you avoid costly and common timing mistakes.

 

Say, I open an account and start investing with Betterment. How do I adjust my asset allocation or is this automated?

Adjusting your asset allocation is extremely simple. Within your account you will find an asset allocation slider. You move the slider between stocks (more risk) and bonds (less risk). We encourage you to set the allocation you desire to start, and then sit back and relax. Frequent asset allocation changes typically don’t lead to higher returns. We regularly check to make sure your allocation stays on target, and automatically re-balance quarterly as well as any time it strays more than 5% away from that target.

 

With many people on I-phones and android devices, is Betterment integrated electronically to make balance adjustments or receive notifications?

We have an iphone app so you can do all the cool things you do on the computer right from your mobile device. You can add and withdraw money, set your asset allocation, and check your account activity right in the palm of your hand.

 

I’ve heard you use the saying social finance.❠What do you mean by that and what does it mean to investors?

At Betterment we are a community of savers invested in the broad stock market together. We provide tools such as peer comparisons to help each other make the right choices. You’ll be able to see for yourself how others like you (in your same age bracket, earning the same income, and with the same gender) are investing so you can compare and learn as you go. So if you aren’t alreadyâ”you’ll soon be an investing wiz.

 

Does Betterment offer training and education resources?

Our website provides a wealth of information about investing and why we’ve chosen the Betterment portfolio. If you aren’t familiar with ETFs, you can access our FAQ and get all of the information you need. Or perhaps you are an active investor who wants a little bit more knowledge about our portfolio. You can find a downloadable prospectus for each fund right on the website. Most importantly, we are always available to take customer calls and emails. We have a devoted customer service team, and we make sure that everyone at Betterment interfaces with our customers. If you have a question about your account, you might end up chatting directly with me!

 

What type of growth have you seen with Betterment and where do you see Betterment 10 years from now?

I am so happy with the growth Betterment has experienced thus far. We have more and more customers every day, and in just 6 months we have tripled the size of our team and quadrupled the size of our customer base! In 10 years I hope to see Betterment providing ideal investing solutions for tens of millions of people like you and me.

 

Jon, thank you so much for your time!  To end this interview, I have one last question for you.  What one piece of advice would you give my readers to be successful with their investments and retire without money worries?

Thank YOU, Jon. It’s a pleasure. The one piece of advice I can give your readers is to start now. Did you know that if you start saving for retirement when you are 25 instead of 35 you could end up with twice as much money?

It is important to focus on the long term, and if you want to maximize your investment returns and retire with cushion, invest in a diversified, liquid portfolio. Set it and forget it, and you will see your money grow.

 

Want to find out more?

I’m sure you’re super interested in what Betterment has to offer.  Who knows, you may even be starting the journey of saving for retirement and don’t know where to invest?  Betterment is the place to go if you’re feeling lost.  In fact, they are offering a $25 signup bonus right now just for singing up!  you can click the banner below to go straight to the bonus!

If you’d like to know more on their services, I wrote a review a while back explaining a little more in depth about what Betterment provides.  You can access that interview here.

Photo by TCDisrupt

Firstrade Broker Review 250 Free Trades

There is a little known discount stock broker out there by the name of Firstrade.  While not as popular at Zecco or Options House, Firstrade might be a great option for you.  Firstrade offers a wide range of financial services and investment options.  They have everything from Roth-IRAs to traditional IRA accounts to individual trading accounts.

First, a little history of Firstrade…

-Founded 25 years ago as First Flushing Securities focusing on smaller communities.

-Firstrade was officially launched in 1997

-In 2005, Firstrade was named “best deal” by Smart Money Magazine

-Firstrade continues to rapidly grow and put an emphasis on customer service

 

 

Usability and site design

Firstrade’s site is extremely clean and easy to use.  I love their tabbed navigation bar and clear login box on the right side.  Firstrade makes it clear as to what they offer and always make it known what the latest deal or marketing program is going on.  Research is also very easy on Firstrade’s website.  They provide simple, easy to use screening tools and track stats of your return on investment.

 

Financial Products

-Stocks: You have a choice of a wide variety of investment options.  Choose stocks from NYSE, AMEX, NASDAQ, and other OTC markets.

-Exchange Traded Funds

-Bonds/CDs/Fixed Incomes

-Mutual Funds

-Options

-Dividend Reinvestment

-Roth IRA and 401k support

 

Pros

  • $6.95 flat fee for real time trading, lower than Scottrade
  • Free mutual fund investing
  • Free dividend reinvestment
  • No inactivity or account maintenance fees
  • $50 Firstrade referral bonus
  • 250 free trades ($1,000+ deposit)

Negatives

  • $6.95 commission is not cheape compared to Zecco or Options House
  • No stand alone trading platform, web based only
  • Slow fund transfer
  • No systematic investment plan yet
  • Can’t buy fractional shares

All in all

Firstrade offers a wonderful selection of mutual funds, but stocks and large orders are too expensive in my opinion.  Also, Firstrade’s platform is outdated and probably makes more sense for options traders.  Plus, their education sources are slim to none.  They need to do a better job at attracting the average stock trader or investor.  For cheaper brokerages with better options, check out Options House and Zecco (both I highly recommend.)

READERS: Has anyone used Firstrade before?  What’s your experience with them?  Any good?  Any horror stories?  

 

Betterment: Investing So Easy, a Caveman Can Do It

There’s a buzz going around within the investment community.  You are all familiar with the big players in the brokerage community like Options House. There is a new kid on the block.  This new kid goes by the name of Betterment.com.  Like other online discount brokerages, Betterment gives you the option of holding ETF’s and bonds in your account.

This might sound like another brokerage, but it’s different.  Betterment’s goal is to simplify your investment accounts.  There is a common concensus that investment brokers are complicated and most people get confused when trying to invest.  Betterment simplifies the process and streamlines it through the use of automation.  Simply select your funds, put it on autopilot, and you don’t have to look at your funds for years.  Sounds pretty good doesn’t it?  Let’s take a closer look…

 

Betterment Basics

Investing with Betterment is a simple process.  First, you need to sign up through their website.  Once you have a profile setup, you need to connect your checking account and start transferring money to your Betterment account.  It’s important to point out that there are no fees associated with these transfers.  Use the slider feature to control your risk tolerance and adjust as necessary.  Then it’s up to you how often you want to adjust your asset allocation.  Simply by opening a new account, they will fund your account with a $25 bonus, sweet!  Here is a great tour of their site, they explain it better than I can 😉

 

 

Investment Options?

So, you have some money in your account now, what’s next? Well, Betterment has already done the grunt work for you.  They have picked 6 ETF funds that represent the United States stock market.  Alongside those six funds, they also have chosen two bonds funds.  Here are their fund options:

Stocks:

  • 20% Vanguard Total Stock Market
  • 20% iShares S&P 500 Value Index
  • 20% iShares S&P 1000 Value Index
  • 15% iShares Russell 2000 Value Index
  • 15% iShares Russell Midcap Value Index
  • 10% DIAMONDS Trust Series 1

Bonds:

  • 50% iShares Barclays TIPS Bond Fund
  • 50% iShares Barclays 1-3 Year Treasury Bond Fund

This mix of stocks and bonds is a fantastic asset allocation.  Coming from someone who is well versed in what funds to invest in, Betterment has done a great job picking these out.

 

What separates Betterment from the rest?

So, what makes Betterment more effective than other brokers?  Well, their visualization and automation tools are a couple examples.  Most people are visual, and Betterment knows this.  I love their visual tools for forecasting  returns  years down the line.  For example, you can play around with their forecasting tools and see what your account will be worth 40 years down the line and such.  It’s cool to see how the asset allocations you make today drastically affect returns down the road.

Along similar lines, Betterment has great tools for automation in regards to asset-allocation automation.  If you set it and forget your savings accounts, you could see your allocation percentages start to swing too heavy to one side.  Betterment has an automation tool to keep that from happening so you don’t have to worry about it.  This is a great feature for people on the go.

betterment investing

Sounds good, but what are the fees?

This is where Betterment will scare off some investors.  If you have account with under $25,000, the fee will be 0.9% on an annual basis.  I know this was something that scared me off.  I like to plan my own investments and I know enough to make those decisions.  However, if you’re too busy to do that, 0.9% fee is not bad for the service you’re getting with Betterment.  The good news is that the Betterment fees decrease with the more money you invest.  If you have an account over $25,000 the fee will be 0.7% annually.  If you have over $100,000, the fee is 0.5%.  Anything over $500,000 is 0.3%.  Starting out, the fee is pretty expensive but decreases over time.  This is something that you will need to decide.  To some, it just won’t be worth it.  For people new to investing, this fee is nominal.  It just depends on your individual experience.

 

Amazing flexibility

Betterment is setup for people who want flexibility.  It’s ridiculous how much flexibility you get with Betterment versus other brokers.  Here is a summary of the flexibility Betterment provides:

-No  minimum  initial investment

-Set allocation depending on your savings goals.  Simple slider makes this very flexible

-Easy to move money between Betterment and your checking account

-Activity tracking feature to track withdrawals and additions

 

Is my money protected?

Like any other respected brokerage, Betterment is insured up to $500,000 by SIPC. You can rest easy about your money.  Here is some more info regarding their money insurance policy:

Betterment accounts are SIPC protected (up to $500,000 per customer) against losses resulting from fraud or mismanagement. SIPC coverage means that if anything happens to Betterment you will get your securities back promptly. Unlike FDIC insurance for banks, SIPC does not protect against losses due to normal swings in the market.

 

Conclusion!

Betterment is a wonderful way to invest for people on the go.  I would not recommend Betterment to people who know how to manage their investments due to their high expense fees.  I do love how their passion is to reach average Americans and help the masses save for their retirement.  All in all, they run a great brokerage.  I also like the automatic asset re-allocations.  This is unheard of in the investment community, such a great tool.

If you are looking for a “set it and forget it” broker for your retirement accounts, Betterment is the way to go.  Don’t forget to open an account now with the $25 bonus below!  Betterment could be you new best friend in the wild world we call investing. Start investing today!

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