May is going to be a sad month for discount investors.
That’s because Loyal3 — a stock trading platform that had no fees and no commissions to buy or sell — is effectively shutting down.
Loyal3 is becoming FolioFirst
Loyal3 was a great idea in stock trading. It was free to open an account, you could buy fractional shares starting at just $10 and you had access to the initial public offerings (IPOs) of new companies that were just debuting on the stock markets.
One limitation of Loyal3 was that investors only had access to a universe of 75 or so stocks through the service. But that list included very popular companies like Alphabet (Google), Facebook, Tesla, Netflix, Starbucks, McDonald’s and Coca-Cola, among others.
Fees are coming
In an April 18 email to customers, Loyal3 revealed it will shut down over the weekend of May 20-21 as it transfers all remaining assets to FolioFirst. The new platform is being built especially for Loyal3’s customer base.
A website for FolioFirst will go live on May 22 when the new service officially launches.
You’ll still enjoy commission-free trades with FolioFirst, but there will be a $5 monthly fee on all accounts effective August 1.
One nice feature of FolioFirst is that you’ll have access to more than 200 publicly traded stocks and ETFs — roughly three times as many as you had access to with Loyal3.
But don’t expect IPO access when Loyal3 changes over to FolioFirst in May. That feature will not available for the foreseeable future on the new platform.
That’s what made Loyal3 so great: It granted small-time investors access to select IPOs from more than a dozen companies — all sold at the same pre-market open price that Wall Street heavyweights paid!
If you want first crack at IPOs going forward, consider Motif Investing as an alternative.
There’s still at least one way to buy and sell stocks for free
Loyal3’s announcement about the change to FolioFirst and the accompanying monthly fee is part of a larger trend in the industry that’s squeezing discount investors.
Just days ago, Motif Investing said it will begin charging a $10 semi-annual platform fee in May on low-balance accounts with little trading activity. That’s in addition to the longtime fee of $4.95 per stock trade that’s been in effect since Motif launched a few years ago.
Fortunately, there’s still Robin Hood, a zero-commission online brokerage that offers free trades from your smartphone (both iPhone and Android)!
Another option to consider — though it isn’t exactly free — is Stockpile. This online brokerage gives you access to a universe of roughly 900 stocks and ETFs. Each buy or sell trade you do costs just 99 cents, which is pretty cheap! And there are no account minimums to maintain or other ongoing monthly fees you’ll have to pay with Stockpile.