Advice: What account is best for young millennial?

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interwebopinion
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Advice: What account is best for young millennial?

Post by interwebopinion »

I was asked by my niece, a millennial, about opening an account. I've been telling her about the Boglehead philosophy and she seems to be on board. She has about $3k and is now ready to open an account.

I normally would recommend Vanguard, but given recent threads about and some prior personal experience with their customer service, I'm thinking a better option might be to open an account elsewhere and buy Vanguard ETFs. Which institutions would your recommend and why? What do you think of Robin Hood, which she asked me about?
backpacker61
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Re: Advice: What account is best for young millennial?

Post by backpacker61 »

Maybe I'm a die hard, but I'm still sticking with Vanguard (I opened my first account there in 1989).

Minimum to open an IRA at Vanguard is just $1000.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
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LiveSimple
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Re: Advice: What account is best for young millennial?

Post by LiveSimple »

Fidelity is a good option for both index mutual funds and ETFs.
Charles schawb if you want to buy ETFs and limited index funds.
MishkaWorries
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Re: Advice: What account is best for young millennial?

Post by MishkaWorries »

Really any of the discount brokers would work for this simple type of account. Fidelity may have a leg up by her being able to buy fractional shares of Vanguard ETFs (phone app only).

Have her go online and poke around their websites and see which one she likes the best.
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retired@50
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Re: Advice: What account is best for young millennial?

Post by retired@50 »

interwebopinion wrote: Mon Oct 12, 2020 8:42 pm I normally would recommend Vanguard, but given recent threads about and some prior personal experience with their customer service, I'm thinking a better option might be to open an account elsewhere and buy Vanguard ETFs. Which institutions would your recommend and why? What do you think of Robin Hood, which she asked me about?
I use Vanguard, and still love them after 20+ years as a client.

I'd avoid Robinhood. Search the forum for a post by nisiprius and Robinhood and their loose interpretation of rules / laws.

Regards,
This is one person's opinion. Nothing more.
Rlew
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Re: Advice: What account is best for young millennial?

Post by Rlew »

I think the robo advisors like wealthfront or betterment do a nice job with reasonable fees, and have a certain tech-y appeal to the younger generation. It is super easy and automated, so a good starting point for new investors. I obviously prefer a self managed bogleheads 3 fund portfolio myself (or for anyone else who has gained the confidence to do it), but it's amazing how many people find even this to be intimidating when just starting to learn.

One caveat -- if she opens a taxable brokerage at a robo advisor, she will get locked in to a somewhat more complicated portfolio due to tax loss harvesting (if she elects to have them do it) and the fact that they invest in more than 3 asset classes --- this might be an issue when/if she decides to switch to a self managed approach. Given her age and dollar amount though, I'm guessing she's a good candidate for a Roth.
Last edited by Rlew on Mon Oct 12, 2020 9:29 pm, edited 1 time in total.
"When there are multiple solutions to a problem, choose the simplest one" Jack Bogle
Rlew
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Re: Advice: What account is best for young millennial?

Post by Rlew »

I think the robo advisors like wealthfront or betterment do a nice job with reasonable fees, and have a certain tech-y appeal to the younger generation. It is super easy and automated, so a good starting point for new investors. I obviously prefer a self managed bogleheads 3 fund portfolio myself (or for anyone else who has gained the confidence to do it), but it's amazing how many people find even this to be intimidating when just starting to learn.

One caveat -- if she opens a brokerage at a robo advisor, she will get locked in to a somewhat more complicated portfolio due to tax loss harvesting (if she elects to have them do it) and the fact that they invest in more than 3 asset classes. Given her age and dollar amount though, I'm guessing she's a good candidate for a Roth.
"When there are multiple solutions to a problem, choose the simplest one" Jack Bogle
nathanfisher
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Re: Advice: What account is best for young millennial?

Post by nathanfisher »

I’m an older millennial (probably over-opinionated as well) who would recommend Fidelity strongly over Robinhood. My friends and I are moving away from it due to excessive data collection/selling and FINRA violations. A couple of my friends want to keep it though since it’s “graphics are cool” (it’s like a slot machine in one’s pocket). I personally think Fidelity is quite professional. For the record I also like Vanguard’s app too. Both do a good job. The niece will like either Fidelity or Vanguard. Good luck!
Buy_N_Hold
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Re: Advice: What account is best for young millennial?

Post by Buy_N_Hold »

I have used You Invest from JP Morgan and I like it a lot! Easy to use and it recently became commission free. It’s a nice option to consider, especially if she already banks with Chase.
“To turn $100 into $110 is work. To turn $100 million into $110 million is inevitable.” -Edgar Bronfman
hi_there
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Re: Advice: What account is best for young millennial?

Post by hi_there »

Maybe there is something I don't know, but I don't see any advantage to Robinhood for traditional investing now that mainstream brokers are adopting zero commission models. In fact, some of the problems and violations they've had lately have been pretty disturbing. Imagine the lawmaker backlash that would have resulted if something like this had happened at JPM or ML.

https://www.bloomberg.com/news/articles ... f=8wHPVsBX

Besides that, I find that most of the traditional brokerages like that TD, Fidelity, and so on are generally the same as far as basic stock trading functionality is concerned. Unless you are doing something really complicated, I doubt that you'll regret choosing one over another.

Re: Vanguard - having been a customer of theirs for some time (and even once been paid to spend a day on their technology focus group!), I find that their technology and user interface are behind the curve compared to most other brokers. With that being said, they provide one significant advantage, which is a simple and straightforward menu of funds that will help guide rookie investors and keep them from getting confused when starting out. This was helpful to me years ago when I first started investing and didn't have much of an idea of what I was doing.
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novolog
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Re: Advice: What account is best for young millennial?

Post by novolog »

Vanguard Fidelity & Schwab are all good options.

Fierce competition has made these 3 companies very similar in terms of product offerings/rates.
HENRYGRUGER
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Re: Advice: What account is best for young millennial?

Post by HENRYGRUGER »

Interwebopinion,

As others have said, Schwab, Fidelity and Vanguard, for a beginner, is all about simplicity and understanding her options/purpose.

I begin investing with Vanguard because that is where my father invested for 30-40 years. They have all my money. In my 403b, I have all Vanguard funds. I recently executed an Inservice Distribution in my 403b and transferred all my tax deferred dollars into my Vanguard Rollover IRA. I am leaving my Roth Account Dollars in my 403b, as I will be continuing to contribute 100% of my retirement savings dollars until my retirement in 3-5 years in my Roth account.

The best advice you can give your Neice is to invest early, invest often, and invest as aggressively as her stomach will allow, based on her age and risk tolarance. Where she does it is not as important as when she does it, assuming she is selecting from the three mentioned herein.
Outer Marker
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Re: Advice: What account is best for young millennial?

Post by Outer Marker »

If I were just starting out, I'd go with Fidelity and take advantage of their "zero" funds.
3funder
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Re: Advice: What account is best for young millennial?

Post by 3funder »

Vanguard, Fidelity, or Schwab.
rkhusky
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Re: Advice: What account is best for young millennial?

Post by rkhusky »

In customer surveys, Fidelity, Schwab and Vanguard get the highest marks.
KMoney
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Re: Advice: What account is best for young millennial?

Post by KMoney »

I am a millennial, although an older one. I am still happy with Vanguard where I have my IRAs. I also have experience with Fidelity, ETrade, and Schwab due to work 401k and ESPP plans. I prefer Schwab and Vanguard to the others.

Some other thoughts, does she have a 401k or other retirement plan at work where she could consolidate her own brokerage?

Does she use an online bank with brokerage offerings? If I was going to try any other offering, it would be Ally Invest since I already have other accounts there.
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jakehefty17
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Re: Advice: What account is best for young millennial?

Post by jakehefty17 »

I'm 29 years old... been investing about 6 years now.

First off, is she investing in retirement accounts? Starting a Roth IRA is a great place to start for most people. Explain the long-term tax benefits along with the withdrawal limitations/requirements. Roth IRA can be used as a emergency fund (or part thereof) as well. Make sure you stress the importance of low fees and INDEX funds/etfs.

Would recommend Fidelity or Schwab. Both institutions have cash management accounts with free/reimbursed ATM withdrawals. Fidelity's can be automatically invested into a money market account... which is no big deal right now but has historically been a good deal. In my opinion, Fidelity has slightly better/more options for in-house mutual funds than Schwab does.

Vanguard, while perfectly functional and practical, feels like a dinosaur compared to the competition. By this i mean the applications, transactions, cash management solutions are all better than Vanguard. Wouldn't recommend to a younger generation in it's current state. Amazing mutual fund company, but lackluster brokerage.

Steer away from Robinhood, the brokerage treats the stock market a bit like a gaming application. Not a good place to learn the basics.
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." -Charles Bukowski
retired@50
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Re: Advice: What account is best for young millennial?

Post by retired@50 »

I managed to dig up a nisiprius post about Robinhood. It's not flattering.

See link: viewtopic.php?f=10&t=308888&p=5120439&h ... d#p5120439

Regards,
Last edited by retired@50 on Tue Oct 13, 2020 8:22 am, edited 1 time in total.
This is one person's opinion. Nothing more.
SchruteB&B
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Re: Advice: What account is best for young millennial?

Post by SchruteB&B »

Outer Marker wrote: Tue Oct 13, 2020 5:43 am If I were just starting out, I'd go with Fidelity and take advantage of their "zero" funds.
That would be my advice, or the Target Date index funds at Schwab.
trevorshhh
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Re: Advice: What account is best for young millennial?

Post by trevorshhh »

Young millennial here. I went with Fidelity because there were no minimum amounts for mutual funds like Vanguard, and I started small a few years back. Have a healthy enough portfolio now.

I would not recommend Robinhood. The simplest reason is that it does not have IRAs, which seems to be the best starting place before a taxable brokerage account. I used to use Robinhood, as it is very popular among my peers, but found it has a lot of downtime during high volatility periods, no support, and relatively few features compared to mature brokerages. At this point, the only advantage it has over major brokerages is free options trading, which in my opinion is actually a disadvantage.
All in VTI, VXUS, BND and equivalents.
Topic Author
interwebopinion
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Re: Advice: What account is best for young millennial?

Post by interwebopinion »

Thanks all. Sounds like Fidelity is a good safe recommendation. This is for her non-retirement savings.

Robinhood the brokerage is like the reverse of Robin Hood the legend, in that they take from the poor (unwashed masses) and give to the rich (HFT traders) :D
BV3273
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Re: Advice: What account is best for young millennial?

Post by BV3273 »

All the big name brokerages are fine.

I’d definitely steer clear of the “noise” brokerages that keep popping up. M1, Acorns, Robinhood, etc. nothing wrong with them, they are just super easy to tinker your holdings in.
snailderby
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Re: Advice: What account is best for young millennial?

Post by snailderby »

Schwab, Fidelity, and Vanguard are frequently recommended on this forum. M1 Finance has a very nice user interface and is worth considering as well for its ease of use, although there is a fee for terminating an IRA or making an outgoing direct account transfer if your niece switches brokerages down the road. Merrill is another option if she already has a Bank of America account, but only if she sticks with $0 commission ETFs.
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