Folio Investing Review – Build Your Own Folios

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As an investor, you want to build a portfolio based on your own particular investment strategy and long-term goals. Luckily, with the advent of robo advisors, it's easier than ever to do just that. One company, Folio Investing, is making it easy for investors to build customized portfolios.

What is Folio Investing?

Folio Investing, also known as FOLIOfn, is an investment platform that provides investing and portfolio management which allows customization as well as tax and cost management benefits. It combines investing in mutual funds and exchange-traded funds, with individual stocks, in what it calls folios.

Based in McLean, Virginia, Folio Investing is a privately held company that was founded in 1998 by Steven Wallman, a former commissioner of the Securities and Exchange Commission.

Officially, the company is FOLIOfn Investments, Inc., which is a wholly owned subsidiary of FOLIOfn Inc., a company that provides investment technology, management consulting and other services to the financial services industry sector.

How Folio Investing Works

The platform is based on folios, which is a special basket of securities with specific features provided by Folio Investing that can be either managed or unmanaged by the platform or other third parties. In short, it’s a basket of funds and stocks customized to meet a specific investment need.

Each folio — whether one provided by the platform, or one you design yourself — can contain up to 100 individual securities, which includes stocks, mutual funds, and ETF’s. You can have an unlimited number of folios in your account, and those folios can even include fractional shares. And under the company’s Folio Unlimited Plan, there are no commissions for buying, selling, or modifying your folio.

The platform offers what it calls Ready-to-Go-Folios, and there are over 100 of them. Each is built around a particular investment strategy, and they’re basically designed to help you get started investing through the folio method.

Once you are comfortable with the concept, you can move on to Build Your Own Folios. This is a custom portfolio that you build yourself based on your own investment preferences and strategies. The folio can include as little as one stock, or as many as 100, including mutual funds and ETF’s.

You can also customize your folios as you go forward. You can do this by allocating dollars equally across all of your holdings, using market cap weightings, or even customize each security weighting.

Features and Pricing

Minimum Deposit $0
Stock Trades $6.95
Options Trades $6.95 + $0.75/contract
Mutual Funds $9.95
Accounts Available Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Simple IRA, Custodial, Coverdell, Trust, Individual, and Joint
Mobile App Yes — Apple iOS and Google Android
Customer Service Phone, Live Chat, Email and Branch Office
Promotions See Firstrade Promotions Page

The use of folios enables you to do at least some of the following on the tax front:

  • Decide the best way to manage your tax lots (they offer 8 automated tax lot options)
  • Control the timing and tax implications of your folio transactions
  • Selectively sell off poorly performing securities to offset taxable gains
  • Defer taking gains; harvest tax losses instead
  • Match winners with losers to avoid incurring taxes at all
  • Sell the highest cost tax lots to minimize taxes

They also offer specific tax management tools to help you handle the income tax side of your investment life. When you sell a security they automatically sell the tax lot that best matches one of the eight automated tax lot options that you choose for your account.

All gains and losses are then downloaded into popular tax software programs, such as Quicken, TaxAct, Microsoft Money, and Tax Cut.

Folio Investing will also provide complete records for both short-term and long-term gains and losses, for income tax purposes.

Folio Investing offers two pricing options, the Folio Unlimited Plan and the Basic Plan.

folio investing pricing plans

The Folio Unlimited Plan (recommended for a portfolio of at least $20,000) fees are:

  • Unlimited Commission-Free trades in twice daily trading windows
  • $3 market, limit, stop and stop/limit orders
  • No investment or balance minimums
  • Annual fees: $29 per month or $290 per year, with 60 days free
  • Unlimited access to 100+ free Ready-to-Go Folios and Unlimited Build Your Own Folios
  • Unlimited personal and retirement accounts (one fee covers all your accounts; personal, joint, retirement, custodial, revocable trust and more)

The Basic Plan (recommended for smaller and/or less active traders) fees are:

  • $4 commission per window trade per $3 market, limit, stop and stop/limit orders
  • $10 market, limit, stop and stop/limit orders
  • Unlimited access to 100+ free Ready-to-Go Folios and Unlimited Build Your Own Folios
  • No investment or balance minimums
  • Unlimited personal and retirement accounts (one fee covers all your accounts; personal, joint, retirement, custodial, revocable trust and more)
  • $15 per quarter service fee, if 3 or fewer trades in the preceding quarter

Under either plan, there is a $25 annual fee for IRA accounts.

Types of Accounts Offered by Folio Investing

Folio Investing offers a wide variety of account types to choose from. For general investing, they offer the following accounts:

  • Individual
  • Joint (multiple)
  • Custodial
  • Trust
  • Business (For legal corporations, professional associations, or professional corporations)
  • Investment club

On the retirement front, they offer the following account types:

  • Roth IRA
  • Traditional IRA
  • Rollover IRA
  • SEP-IRA
  • SIMPLE IRA

Folio Investing Tools

Folio Investing offers the following tools — and this is just a sampling:

Virtual Stock Trading Account. Also referred to as a “Watch Account”, you can use the folios in this account to test strategies without using real money. The account uses the same trading screens and tools that funded accounts do, and once you feel ready to go live, you can convert the account to a real account with a few mouse clicks.

Market Research. This is stock market research powered by Quotemedia. This provides charts, financials, company information, historical quotes, and other information, very similar to what you would find on a site like MarketWatch.

Performance Reporting. This tool enables you to view the performance of your investments over any time period against popular benchmarks, such as the S&P 500 or even against individual security or fund.

Earlier we talked about Ready-to-Go Folios, the prepackaged folios offered by the platform to investors who are not yet comfortable creating their own folios. The platform offers various types of investment folios, including:

  • Target date folios
  • Low volatility folios
  • Asset allocation folios
  • Bond folios
  • Fundamental folios
  • Geographic folios
  • Investment style folios
  • Market index folios
  • Sector/industry folios
  • Strategy folios

Those are just the general categories of folios — under each category you’ll have a choice of several folios that are even more specific. There are more than 100 individual Ready-to-Go folios to choose from.

The Good

Why might you be interested in investing your money in folios, rather than simply doing it through mutual funds and ETF’s?

Folio Investing offers the following:

  • Ready-to-Go Folios that you can use as is or modify — many with very strong track records
  • You can easily also follow someone else’s recommendations such as a newsletter, a website or perhaps a strategy of your own
  • Build unlimited Folios with up to 100 stocks, mutual funds, and ETFs each
  • You can have as many Folios as you want in an account, and invest commission-free with the Folio Unlimited Plan
  • The platform helps you determine what kind of investor you are — and what asset allocation might be right for you — based upon your answers to six straightforward questions
  • Their Window Trading system enables you to buy fractions of shares and invest with any dollar amount. Example: Spread $500 or $5000 across a whole Folio
  • The Folio Unlimited Plan gives you all this for one low flat fee, allowing you to diversify cost-effectively and simply

The Bad

There aren't many downsides to Folio Investing. The pricing is reasonable and it's great for investors who like to customize their portfolio or want something that is ready to go. Folio Investing might not be ideal for investors who want a lot of direction and assistance.

Summary

Folio Investing offers a comfortable blend of prepackaged investment folios, plus the ability to create and customize your own folios. This can be the perfect mix for the person who wants to control his or her own investment strategies, but also wants the option of having access to broker prepared investment packages.

The transaction and account fees are reasonable for the program offered, and the platform has been around much longer than most of its competitors. The fact there are no minimum upfront or balance requirements is also a major advantage for the new or small investor.

If you’re a self-directed investor, but one who still feels the need to rely on broker assistance from time to time, Folio Investing could be the right platform for you.

Kevin Mercadante

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids.

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14 Comments

  1. If I had to rate FolioInvesting I would give it a solid 5 out of 10.
    I have had several market orders not being executed. I have lost a considerable amount of money thanks to FolioInvesting’s mediocre platform. Thousands of dollars. I am in the process of moving my account to a more legit trade platform. Several times I have contacted their Customer Support and it’s just as bad as the executions. Yes, FolioInvesting may sound like a good deal… until you cant sell your stocks when you want to and end up losing exponentially more than you would have lost on fees.

    I used to recommend Folio Investing to friends and colleagues but I will be doing the opposite from now on. I also have my IRA account with Folio and I can’t say I will be sleeping well at night knowing this.

  2. I was under the impression that it was $5 a month and that trades were free for the 200 securities and ETF’s? Is this OLD information?? And, the ability to buy/sell fractional shares are a very nice PLUS…that said, the UI and features…er…suck IMO. They *say* they will add features but they’ve been around for a while via folio client.com. FYI, I moved from Loyal3.com (well they moved us!) and I will be cashing out and moving to…somewhere else…prob robinhood.com or another.

    1. I think the switch was handled poorly by Foliofirst. I had to call the customer service for an issue trying to change my bank and the lady was extremely rude and kept talking to me like I was an idiot. I loved Loyal3, not liking Foliofirst. I also use Robinhood and will continue to do so. I’m not so sure about Folio First.

  3. Very poor customer service. They tell you that they will call you back and they never do. They hire college kids to answer the phones with little to no training. No manager or supervisor is on duty after hours. When you do get a hold of a manager they are rude and unhelpful

  4. FolioFirst is total crap! I got stuck with them when Loyal3 shut down, and now that I’ve transferred my assets out to a broker whose website doesn’t fail all the time I’ve been hit with a $100 fee! Why should I pay some piece of crap outfit that I never wanted to be associated with in the first place? Total scam, stay far away from these thieves.

  5. I was with Loyal3 but after they shut down, my $21,000 worth of stocks was transferred to FolioFirst. After using them for a few months I have nothing outright bad to say except that their website doesn’t function that good. This service is meant for people who like to use Direct Stock Purchase Plans. You can buy an individual stock with as little as $25. (If you purchase a batch of 10 stocks at one time the minimum is reduced to $5 a stock). The fee is $5 a month for up to 2,000 trades a month. Their regular website charges $29 a month but if you were a former Loyal3 customer they only charge you $5.
    To sum up: If you’re a long term investor that wants to buy a little each month and just forget about it, this isn’t that bad of a service. I have ETrade and use that for my larger stock purchases and shorter term trades. FolioFirst is for my buy a little each month and forget about it stocks.

  6. I was a loyal3 customer that got transferred to FolioFirst. I absolutely hate FiolioFirst with a passion. They charge you ridiculous fees. What’s the point of monthly fees for not doing anything? TD ameritrade, Loyal3, USAA, hell just about every brokerage doesn’t charge you fees just for holding money. I’ve been trying to transfer my assets to another brokerage, but it fails every time and the customer service of FiolioFirst is terrible.

    If you’re reading this review, save yourself some trouble and stay away from the crapshoot that is FiolioFirst.

  7. Folio Investing (Folioinvesting) makes window trades twice a day and everybody gets the same execution price. I was with them 2 years 9 months and I didn’t like the execution prices I got. I could see market anomalies a few minutes after the 11 AM and 2 PM windows as the trades hit the market en mass. Worst, when I switched to Interactive Brokers, Folioinvesting wouldn’t prorate the annual fee that I had just paid on two accounts! They just kept the money and told me that’s their policy. Plus, customer service is awful – slow and uninformed. Stay away.

  8. Basically FolioClient is a poor “investment”. You’ll pay the client advisor a fee to put your money on autopilot. Occassionally you’ll get a return, mostly your advisor will make a princely sum while your money lingers. You’ll do well just putting your hard earned money into a Vanguard Index Fund or ETF Fund. Low fees and decent returns. Just avoid FolioClient…Please! I have no financial interest in Vanguard other than a couple of Index Funds…..

  9. I was a Motif customer who was acquired by Folio when they took over the Motif accounts.
    Folio took over on May 21, 2020. I did not receive my Folio login for a week after that.
    Then the mobile app kept hanging and locked my password two day ago.
    They DO NOT ANSWER the phone. They DO NOT respond to support emails except
    with an automated case number. Their web site is clumsy and personal data updates
    are difficult to complete. Then, if you update your phone number they treat you like
    you’re trying to hack the account.
    As soon as i get a password, I will use it to close the account.
    It’s a shame. It could have been good, but they screwed it up.

  10. Yeah, after being transferred to folio from another firm I have to say I am severely unimpressed and disappointed. The website reminds me of using one built in 1995 and the app still doesnt work. There are free platforms out there that are more user friendly, provide real time updates, and are much more responsive than this company. I would rate this a 3. They have the ability to do fractional shares which is cool, but not worth the trash platform they’ve built.

  11. The author claims “there aren’t many downsides”…. is he a paid shill? It’s the worst brokerage service I’ve ever seen. Has this author never seen what others offer or compare it to Motif’s website? Had my account transferred in the Motif fire sale. It was interesting to read why Folio only bought the client base and not the Motif technology. Folio said it wasn’t needed since they do the same thing and it would be ‘overlap’ technology. Well I can say with 100% certainty that statement is inaccurate and false. Folio website looks like it was designed by high schoolers. Motif absolutely blew it out of the water. As a customer there is no comparison to other peers like we had with Motif, there’s no comparative index to fellow portfolio’s. The UI uses very old looking ugly charts. It’s so bad. Honestly, it’s an embarrassment. They charge a ridiculous fee to basically do nothing. I’m moving it out into Etrade.

  12. Hey Trey and/or others…sorry for the very newb question:
    How do I transfer my Folio holdings out into my Vanguard? Is that possible with a few clicks, and are there fees to do so?
    I’m doing this because as you said…Folio is the worst!

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