A Beginner's Guide To Using Folio Investing

Folio Investing is an online investment brokerage that offers commission-free trading and a range of tools for managing investment portfolios. With Folio Investing, users can create and manage diversified portfolios, known as folios, which can contain up to 100 stocks, ETFs, and mutual funds. One of the key advantages of Folio Investing is the ability to invest in dollar amounts, allowing users to buy fractional shares of stocks and invest in exact dollar amounts rather than buying and selling whole shares. This makes it easier to rebalance and auto-invest. Additionally, Folio Investing provides access to a wide range of securities, including U.S.-listed stocks, ADRs, mutual funds, and various other investment options. The platform also offers automated settings to maintain a balanced portfolio and control tax impacts. With its flat-fee pricing structure, Folio Investing aims to provide a cost-effective and flexible approach to investing.

Investing in US-listed stocks and ADRs

Step 1: Understanding US-Listed Stocks and ADRs

Before investing, it's important to understand the basics of US-listed stocks and American Depositary Receipts (ADRs). US-listed stocks refer to securities listed on major US equity exchanges, such as the New York Stock Exchange (NYSE) or the Nasdaq. ADRs, on the other hand, are negotiable certificates issued by US depositary banks, representing shares of foreign companies' stock. ADRs allow US investors to purchase stock in overseas companies that wouldn't otherwise be available on US exchanges.

Step 2: Creating an Account with Folio Investing

To start investing with Folio Investing, you'll need to create an account on their platform. This typically involves providing personal and financial information, setting up funding sources, and agreeing to their terms and conditions. Make sure to review their fees and features to ensure they align with your investment needs.

Step 3: Researching and Selecting Investments

Folio Investing offers a wide range of US-listed stocks and ADRs to choose from. Conduct thorough research on the companies you're considering, including their financial health, business model, and growth prospects. Diversifying your portfolio across different sectors and industries is generally considered a prudent strategy to manage risk.

Step 4: Placing Orders

Once you've identified the investments you want to make, you can place orders through the Folio Investing platform. Take advantage of their patented twice-daily trading windows or utilize market, limit, stop, and stop-limit orders. Consider using FolioTrade®, their tool that simplifies buying and selling a number of stocks and funds at once, allowing you to manage your entire folio with ease.

Step 5: Monitoring and Managing Your Investments

After placing your orders, regularly monitor the performance of your investments. Folio Investing provides various tools to help you manage your folios, including rebalancing features to maintain your desired asset allocation. Stay informed about news and developments related to your investments, and make adjustments as necessary to align with your investment strategy.

Step 6: Understanding Taxes and Fees

Be mindful of the tax implications and fees associated with investing in US-listed stocks and ADRs. ADRs, in particular, may involve double taxation, as you could be taxed locally and in the foreign country of the company you're investing in. Additionally, there may be custody fees or other charges outlined in the ADR prospectus. Consult with a tax professional to ensure you understand your tax obligations and how to optimize your investments from a tax perspective.

By following these steps, you can confidently begin investing in US-listed stocks and ADRs using Folio Investing. Remember to always assess your risk tolerance, conduct thorough research, and stay informed about market trends and developments.

Buying and selling stocks/funds or entire folios

Folio Investing offers a blend of prepackaged investment folios and the ability to create and customise your own folios. A folio is a virtual basket containing stocks, ETFs, mutual funds, or any combination of these that you choose. You can create as many folios as you want and add up to 100 stocks, ETFs, and/or mutual funds to each one. You can buy, sell, or rebalance all at once—in one transaction, with one click—or trade securities in the folio individually.

You can buy and sell individual stocks/funds or entire folios. With Folio Investing's management tools, it's easy to buy and sell multiple stocks and funds at once. Their folio trading capability means that you don't have to create separate orders for each security transaction. Instead, they allow you to buy and sell the stocks in an entire folio as a single transaction—with up to 100 different securities in each transaction.

You can also invest in dollar amounts. You are not limited to buying and selling whole shares of stocks; you have the freedom to invest the exact dollar amount you want with dollar-based investing, which also makes rebalancing and auto-investing possible and easy. For example, you can invest $1,000 per month across an entire folio of 100 stocks, even if that means you are buying only a quarter of each stock.

Folio Investing also offers a series of unique FDIC-insured cash investment products. They offer exchange-listed fixed-income ETFs and many closed-end bond funds, but they do not offer individual bonds.

Investing in dollar amounts

For example, if you want to invest $1,000 per month across a folio of 100 stocks, you can do so, even if that means only purchasing a quarter of a share for each stock. This is in contrast to other brokerages, where you are limited to buying and selling whole shares.

When creating a folio, you can set the percentage of each stock you want to own, and the target weights. Every time you invest money in a folio, your target weights will be used to calculate how much to invest in each security. For instance, if you want to add $1,000 to a folio that has Google weighted at 10%, Folio Investing will automatically buy $100 of Google stock and allocate the remaining $900 among the other stocks in the folio. You can easily adjust the weights of the stocks in a folio with each trade.

Folio Investing's dollar-based investing feature also makes rebalancing and auto-investing possible and straightforward.

Rebalancing your folios

As the value of your securities changes over time, the weight of each security in your folio will also change relative to the original weights that you set. This can result in you owning too much of some securities and not enough of others, which can impact your investment strategy. To maintain your original strategy, you will need to rebalance your ownership percentages.

Rebalancing your folio involves buying and selling precise amounts of your holdings to bring the current weights back in line with your target weights. This is an important part of portfolio management and helps to maintain appropriate diversification. It ensures your investments don't become overweighted in some securities and underweighted in others. For example, if you have a folio of 20 securities that are equally weighted at 5% each, and three of these securities rise dramatically to represent 30% of your folio, you will need to sell some of these over-represented securities and buy more of the other securities to get your folio back in shape.

FolioTrade® is a tool that can help you accomplish precise rebalancing in seconds. Folio Investing also offers automated settings to maintain the right balance for you.

With Folio Investing, you can rebalance all at once—in one transaction, with one click—or trade securities in the folio individually. The Folio Unlimited Plan allows you to pay no commissions for rebalancing a folio.

Accessing mutual funds

Folio Investing offers access to more than 1,000 mutual funds. Before investing in a mutual fund, it is recommended that you carefully read the fund's prospectus to understand its objectives, strategies, management fees, and other expenses.

With Folio Investing, you can buy and sell individual stocks and funds or entire folios. Their folio trading capability means that you don't need to create separate orders for each security transaction. Instead, you can buy and sell the stocks in an entire folio as a single transaction, with up to 100 different securities in each transaction.

Folio Investing allows you to invest the exact dollar amount you want. You are not limited to buying and selling whole shares of stocks. With their patented window trades, you have the freedom to invest a specific dollar amount, which also makes rebalancing and auto-investing possible and easy. For example, you can invest $1,000 per month across an entire folio of 100 stocks, even if that means buying only a quarter of a share of each stock.

You can also set up automatic buy/sell orders to maintain a disciplined investing schedule. You decide how much money to invest or remove and when the transaction will occur. You can set up as many automatic buy/sell orders as you want for each folio.

Frequently asked questions