Technology has changed the way we invest our money. Only a generation ago, the only way to get money directly into the markets was to go through a broker, and brokers often came with some hefty fees. Even today, using the services of traditional investment advisers may cost you more than 3% and likely not less than 1%. The addition of trading commissions, taxes and mutual fund fees can lead to a lot of lost gains over time.

With a host of new and innovative ways to invest, the decades-old fee structure is under attack. What are these new ways to invest and do they fit your style of investing? If they do, you may be able to save a lot of money.

The Basics
Web technology has allowed nearly everything to be automated; there literally is "an app for that" and that includes investing. Sites like, and all offer do-it-yourselfers a guided approach to investing, without the hefty fees that come with 401(k)s and some advisors.

Most of these services take an academic approach to investing based on Modern Portfolio Theory (MPT). They don't try to beat the market or pick individual stocks; instead, they use low cost exchange-traded funds (ETFs) to mirror the market and rebalance the holdings to redirect funds into the lesser performing areas of the portfolio. Although contrary to conventional wisdom, this buy low and sell high approach may increase portfolio gains as much as 2%, according to sites like

Some sites allow you to invest into ready-made portfolios based on your risk tolerance. has more than 100 portfolios designed to fit your investing profile. Think of it as online dating, but with investing. If you're 50 years old, have a low risk tolerance and have a tax deferred IRA, there's a folio that matches your profile.

Other sites don't design portfolios, but may recommend an allocation of ETFs that attempt to capture the performance of certain investment products. helps you determine the proper mix of stocks and bonds by asking you a series of questions. Based on these questions, they recommend an allocation of treasury bond and stock ETFs. Your asset allocation will change based on your changing investment profile. As you age, the site will likely recommend a higher weighting of bond ETFs. is similar to Betterment, in that it recommends certain allocations, but like many of the others, it helps you to properly rebalance your portfolio. If your stock funds have performed so well that they make up too much of your portfolio, will send you an e-mail telling you exactly what to buy and sell to get your portfolio back into balance.

For the Stock Pickers
Other services, like Jim Cramer's Action Alerts Plus, allow you to trade alongside of him as he buys and sells individual stocks and ETFs. When he makes a trade, the service sends you an e-mail so you can make the same trade. Along with Action Alerts Plus, there are numerous services like this available to traders who want to do more than make long-term investments on broader market products.

Too Good to Be True?
These self-service investing sites may not be the ultra-low cost solution they claim. Action Alerts Plus charges $399.95, or a little more than $33 per month, representing an approximate fee of 1.5% on a $25,000 portfolio. Marketriders charges a monthly fee of $29 per month, making the fees slightly more than 1% of a $25,000 portfolio. These fees are in line with traditional investment advisers, but traditional advisors may have account minimums significantly higher than $25,000. With no management fee for the first $25,000 invested, may be the best value, but fees alone aren't the only indicator of value.

The Bottom Line
For investors without the knowledge to directly invest, a traditional advisor who has a personal relationship with his or her clients may still be the best choice. Because of the relative infancy of these do-it-yourself sites, they don't yet have a proven track record of providing enough funds for retirement. It may be 20 or 30 years before the validity of their claims are verified. Until then, some experts may advise to invest non-essential funds in services like these and still leave retirement funds to the traditional, time proven advisors.

The mention of the above services does not constitute Investopedia's endorsement of the companies. Complete your own due diligence before committing investment funds to any of these services.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares Agency Bond

    Find out about the iShares Agency Bond exchange-traded fund, and explore detailed analysis of the ETF that tracks U.S. government agency securities.
  2. Investing

    Career Choice: Bulge Bracket Vs. Boutique Bank

    Bulge bracket banks offer higher salaries and prestige. But boutique banks are rapidly gaining market share and may offer better work/life balance and job security.
  3. Trading Strategies

    How To Buy Penny Stocks (While Avoiding Scammers)

    Penny stocks are risky business. If want to trade in them, here's how to preserve your trading capital and even score the occasional winner.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  5. Markets

    Moral Hazard in the Chinese Market

    The Chinese government faces the issue of balancing its desire to maintain stable markets through manipulation with the danger of a looming bubble if stock prices run up too much.
  6. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Low Volatility

    Find out about the PowerShares S&P 500 Low Volatility ETF, and learn detailed information about this fund that provides exposure to low-volatility stocks.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares S&P Mid-Cap 400 Growth

    Learn about the iShares S&P Mid-Cap 400 Growth exchange-traded fund, which invests in U.S. equities of mid-cap companies that show above-average growth rates.
  8. Mutual Funds & ETFs

    ETF Analysis: Vanguard Intermediate-Term Bond

    Find out about the Vanguard Intermediate-Term Bond ETF, and delve into detailed analysis of this fund that invests in investment-grade intermediate-term bonds.
  9. Professionals

    How to Manage a Client's Return Expectations

    One of the most critical functions of an advisor is to set realistic return expectations for their clients. Here are some ways to achieve this.
  10. Professionals

    Why Leveraged ETFs Are Not a Long-Term Bet

    Leveraged ETFs aren't for the average investor. They can, however, present significant upside potential for the right type of trader.
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth ...
  3. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  4. Systematic Manager

    A manager who adjusts a portfolio’s long and short-term positions ...
  5. Unconstrained Investing

    An investment style that does not require a fund or portfolio ...
  6. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  1. Can you buy penny stocks in an IRA?

    It is possible to trade penny stocks through an individual retirement accounts, or IRA. However, penny stocks are generally ... Read Full Answer >>
  2. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  3. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  4. What percentage of a diversified portfolio should large cap stocks comprise?

    The percentage of a diversified investment portfolio that should consist of large-cap stocks depends on an individual investor's ... Read Full Answer >>
  5. How attractive is the food and beverage sector for a growth investor?

    The food and beverage sector is attractive for a growth investor. The sector's high degree of volatility means it tends to ... Read Full Answer >>
  6. Why should an investor include an allocation to the telecommunications sector in ...

    An investor should include an allocation to the telecommunications sector in his portfolio, because telecom offers an investor ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!