10 Best Investment Companies for Small Investors

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10 Best Investment Companies for Small Investors
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Do you ever feel like your investment options are limited because you don’t have gazillions of dollars? As it turns out, some top investment companies have caught on to the fact that affordable investing should be open to everyone.

It used to be that the investing market had no place for small investors. But over the last decade or two, things have changed. Today, there are several great investing options — even for the smallest of investors.

We’re going to share some of the best investment companies for small to medium wealth investors so that you can create the perfect, personalized plan for growing your wealth.


Table of Contents for the Best Investment Companies:


Types of Investment Companies

As far as investment companies go, you typically have three choices:

Type Key Features Best For Best Companies

Full-Service

  • Guides you to define goals, choose and manage investments
  • Personal touch
  • Advisors available to meet in-person or via phone
  • Higher fees
  • Investors who want a personal touch

Self-Directed or Robo Advisors

 
  • Create and market investment options based on carefully calculated algorithms
  • Offer online articles and help centers
  • Don’t always offer personal advice
  • Typically lower fees of 0.25% or less
  • Investors who want to pay less in fees

Blended Approach

  • Offers full-service and self-directed options
  • Flexible
  • Fees vary depending on level of service
  • Investors who are interested in a hybrid approach

Best Investment Companies for the Average Investor

As a guide, we used the Consumer Reports investment companies’ ratings. This list was based on the feedback of more than 46,000 Consumer Reports members on how they viewed their investment firms. Firms could earn a maximum score of 100.

Full-Service Investment Companies

Edward Jones

Edward Jones
Edward Jones

Edward Jones has been helping people invest money since 1922. The company’s website touts the value of being able to meet one-on-one with an advisor to customize an investment plan that meets your individual goals and financial situation.

In addition, Edward Jones offers estate planning, trust services and more.

There’s no minimum deposit amount to open most Edward Jones investment accounts. Note that its Guided Solutions account does have a minimum balance requirement of $5,000.

There is an annual fee of 1.35% for the first $250,000 you have with Edward Jones. Fees for additional account balances decline as your account balance grows. There are other fees as noted on the Edward Jones website.

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Consumer Reports rating: 87

RBC Wealth Management

RBC Wealth Management
RBC Wealth Management

RBC Wealth Management (formerly known as Dain Rauscher) has an operating history that goes back to the early 1920s. The company changed its name from Dain Rauscher a few years after it was acquired by the Royal Bank of Canada in 2001.

As with Edward Jones, RBC Wealth Management offers accompanying financial services besides investing, such as financial planning and insurance planning.

Depending on what type of investment account you open, RBC Wealth Management has a minimum investment amount of $2,500. Other types of accounts may have higher minimum balances.

Fees for using the investment services at RBC Wealth Management typically run about 2.50% per year. That fee is negotiable once your portfolio hits the $25 million mark.

Consumer Reports rating: 87

Thrivent Financial

Thrivent Financial
Thrivent Financial

Thrivent Financial has been in the investment game since 1902. Along with investments, Thrivent offers services such as estate planning, divorce planning and more.

The company has several different investment programs to choose from, depending on your investment goals. The minimum account balance to invest with Thrivent is $50,000.

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Depending on what program you choose, you can expect to pay fees of 2.00-2.50% annually for investments of up to $100,000. Fees go down as your balance increases.

One of the reasons we chose Thrivent for this list is because Consumer Reports rated it near the top in regard to fee satisfaction.

Consumer reports rating: 88

Self-Directed Investment Firms or Robo Advisors

Betterment

Betterment
Betterment

Betterment is a fiduciary firm that lets you invest in pre-set portfolios of your choice based on your investment goals. It has a variety of stock funds and bond funds to choose from.

There is no minimum to invest. Fees vary based on the type of account you open. Betterment Digital costs 0.25% in annual fees. This is the self-directed route most members choose.

However, the company also offers a Premium account that charges annual fees of 0.40%. The upgraded account comes with hands-on investment advice and has a minimum balance requirement of $100,000.

You can invest in retirement accounts and non-retirement accounts with Betterment.

Consumer Reports rating: 84

Wealthfront

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Wealthfront
Wealthfront

Wealthfront is also a fiduciary firm. It’s rooted in passive investing and offer low-cost index funds. The company says it was started by two guys frustrated with the high fees and less-than-stellar service provided by some traditional investment firms. Their goal? Make investing affordable for everyone.

The minimum to invest with Wealthfront is $500 and there is a 0.25% annual fee.

You can invest in non-retirement accounts, retirement accounts, and college savings accounts with Wealthfront.

Consumer Reports rating: 85

Robinhood

Robinhood
Robinhood

Robinhood helps you invest in U.S. exchange listed stocks and ETFs, cryptocurrencies and more. There’s a $0 minimum to invest, and it’s completely free to invest: There are no fees for a basic account. Robinhood makes money in a variety of ways, including offering a premium account.

Note that you can’t buy mutual funds or bonds with Robinhood. Also, Robinhood doesn’t offer retirement accounts.

Consumer Reports rating: This company was not included in the survey.

Bonus Choice: Acorns

Acorns
Acorns

And then there’s Acorns. Acorns is a “twofer” approach to saving and investing. When you give Acorns access to your debit and credit cards, it automatically rounds up each purchase to the nearest dollar.

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It puts the difference in an online savings account. From there, Acorns builds you a robo-portfolio based on your personally selected preferences. There’s no minimum balance to get started with Acorns, and the monthly fee is between $1 and $5 depending on which plan you choose.

Consumer Reports rating: This company was not included in the survey.

Blended Approach Investment Companies

Fidelity

Fidelity
Fidelity

Fidelity Investments was founded in 1946. As technology has changed, Fidelity says it has worked hard to transition from solely being a full-service broker to a competitive online investment firm.

The company offers a wide variety of investment options, from stocks and ETFs to bonds and more. And the Fidelity website has a plethora of online resources to help you if you have investment questions.

There’s no minimum needed to start investing with Fidelity. Most trades with Fidelity are free. And there are no annual management fees for new account holders either.

However, you will find a $4.95 fee for some U.S. equity trades. And broker-assisted trades are $32.95 each.

Consumer Reports rating: 85

Vanguard

Vanguard
Vanguard

Vanguard was founded in 1975 by investing great John C. Bogle. The company is a popular choice among investors for the balance it achieves in the world of online investing.

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There’s no minimum needed to open an account at Vanguard. However, you do need to have a minimum of $1,000 to invest in mutual and index funds. Most transactions and trades are free. Note that all accounts have a $20 annual fee associated with them.

That fee can be waived if you sign up for e-delivery of statements.

Consumer Reports rating: 92

Charles Schwab

Charles Schwab
Charles Schwab

Charles Schwab was founded in 1971. Its latest enticement for online investors is Schwab Stock Slices. With Schwab Stock Slices you can get “slices” of stocks listed on the S&P 500 for as little as $5 each.

There are no minimum account balances with Schwab and no trading fees in most instances. And there are no annual asset management fees either. Most Schwab funds do have some type of minimum investment requirement. But more than 4,000 of those funds have a minimum investment balance of $100 or less.

Consumer Reports rating: 88


Why Choosing the Best Investment Companies Matters

There are several reasons why you need to choose the right investment company for growing your wealth. To start with, as a smaller investor, investment losses are a bigger deal.

When the investor with a $30 million net worth loses a quarter of his portfolio, he’s still sitting in a place where he’ll never have to worry about money.

However, when you have $50,000 in investments and your investment portfolio drops 25%, it’s a much more painful hit. So you’ll likely want to focus on choosing your investments and growing your wealth in a bit more cautious manner, balancing risk with reward.

In other words, your needs as a smaller investor are different from those with high wealth balances and decades of investing experience.

Fees Matter

Money expert Clark Howard always says that the level of wealth you achieve via your investments is directly related to the amount you’re paying in fees.

In other words, if you want more wealth, pay less in fees. To optimize your investment growth, Clark recommends paying 0.10% or less in fees. But even if you can find an investment company that charges 0.25% in fees you’ll be ahead of the game.

Many traditional investment firms charge 1% or more in annual fees — not to mention trade and other fees. And those numbers might be numbers you’re willing to pay for full service investing help. But without knowing exactly what you’re paying in fees, you can’t properly monitor and/or work to reduce those fees.

Moral of the story: Know exactly what you’re paying in fees, and work to minimize that figure.

Level of Service

High net worth investors typically have a team of investment advisors at their fingertips. As a smaller investor you may not be able to find that level of service. However, there are still plenty of investment companies with service levels that can meet your needs.

There are robo advisors with no personalized service available, full-service advisors that offer a minimal level of service (an annual phone chat for example) and companies with customer service centers to answer the occasional investment question.

Your goal is to find the company with the right level of service for you.

Education and Support

With online investing so prevalent in today’s world, many investment firms offer online investment education.

Investment company websites that make their clients a priority should have a site blog and a host of investment articles you can read to increase your investing knowledge.

Look for an investment company that wants to help teach and support you as you rise to higher levels of wealth.


How to Choose the Best Investment Company

Here’s a brief explanation of each type of investment firm. We’ll also share tips for choosing the right type of firm for you.

Full-Service Investment Companies

Full-service investment companies are the ultimate in investing with that personal touch. Their people will guide you every step of the way, from defining your goals to choosing and managing investments.

You can call when you’re looking for advice or need questions answered, and an advisor will meet with you in person or talk with you on the phone.

Of course, there’s a cost for this high level of service. It’s common to pay up to 1.5% or more of your total assets managed in annual fees.

When selecting a full-service advisor, it’s important to conduct interviews with a few advisors. Get recommendations from trusted friends and/or family members who’ve had notable investing success.

Schedule interviews with at least two advisors from each firm you’re considering. And don’t forget to ask about fees.

Self-Directed Investment Firms or Robo Advisors

Self-directed investment firms are just that: They leave you to do the heavy lifting. Note that most self-directed firms create and market investment options based on carefully calculated algorithms.

They might offer to sell individual stock shares, portions of stock shares, mutual funds, and more. But they don’t just choose funds randomly. The algorithms help self-directed investment firms guide you toward the right types of investments for your needs and goals.

Whereas a full-service firm will have an advisor sit down and talk with you about your options, self-directed firms leave you to research their options on your own. These types of firms have online articles and help centers to assist you, but they don’t always offer personal advice.

One benefit of this automated level of service comes in the form of lower fees. It’s not uncommon to pay .25% or less in fees with a self-directed firm.

When choosing a self-directed advisory firm, it’s important to understand the risks. Knowing each firm’s customer service level is important as well. Some self-directed firms have phone centers you can call with questions while others offer email or chat options only.

Again, knowing all fees associated with each company is important too. Pay special attention to what you’ll be charged for closing your account.

Blended Approach Investment Companies

Finally, there’s the blended approach. Firms that offer a blended approach do offer a full-service advisory option. However, they also offer self-directed options.

The blended approach firm can be great for investors who aren’t tied to either the full-service approach or the self-directed approach — or for those wanting to do a bit of both.

Blended approach firms will charge higher fees for full-service assistance and have a lower fee rate for using their self-directed services.

Again, research is important. You may not interview firm advisors like you would if you were going completely full-service. But it’s important to know how each side of a company’s investment help levels works.

What are the fees? What options are available for customer service? How do you switch from self-directed to full-service? Are there fees for doing so?

These are the types of questions you’ll want answers to before you choose a blended approach firm.

Next, let’s go over some investment basics according to Clark.


Clark Howard’s 4 Ds of Investing

Clark routinely talks about “four Ds” when it comes to investing: Discount, dollar cost averaging, diversification and dull.

Discount

Clark wants you to pay 0.1% or less. There are a variety of low-cost index funds that meet this criterion.

Dollar Cost Averaging

Dollar cost averaging refers to contributing the same amounts of money on a set schedule to an investment — as you would through an employer’s 401(k) plan with a weekly or biweekly payroll deduction.

By doing this, you never overbuy at the peak of market values and you never buy too little when stocks are “on sale” during economic downturns.

Diversification

As the name suggests, diversification is the idea of not putting all your eggs in one basket.

Buying an index fund meets this criterion by definition because you’re buying a basket of securities spread out across hundreds or thousands of companies.

Dull

Finally, dull is an investing mantra for the ages.

An index fund doesn’t chase the hot companies of the moment or the investing equivalent of the flavor of the month. It just owns tiny slices of hundreds or thousands of publicly traded companies.


Final Thought

If you’re an investor with a relatively small amount of cash to invest, there’s no reason you can’t find a trustworthy investment firm with a variety of options. Just know that fees can make or break the amount of wealth your investment accumulates. So do your research on the firms you like and know what you’re paying in fees going in.

In an ideal world, Clark wants you paying 0.10% or less in fees, but even if you’re paying up to 0.25%, you’re still getting a much better deal on fees than you might with many brokerage firms.

Do your research, choose your investments and let the wonder of compound interest work its magic.

More Investment Resources From Clark.com:

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