Your investing platform will determine how much you invest. You’ll have a blast if it gives you many options and tools. You’ll avoid it like the plague if it is old and clunky.
I use five different brokerage platforms because they all offer different experiences. These experiences include depositing money, automated investing, instant investing, fractional shares, stock choices, options trading, dividends, income calendars, and user interface.
Welcome back to the Dividend Investing 101 series (101, 102), where we turn you into the next Warren Buffet (famed dividend investor). Let’s begin.
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Depositing money. The first step to investing is getting cash into your investment account. I have multiple direct deposits into my Wells Fargo account, so it’s easy to transfer into my brokerage from there.
All of my other brokerages offer checking accounts and routing numbers to transfer money into the platform. The best way to save is immediately getting money away from your paycheck and into your investment platform.
Automated Investing. Becoming an automated investor will make you a millionaire. The idea is to invest the money before you even see it.
STASH (affiliate) offers the best-automated investment options from my five brokerages. You can invest in individual stocks, weekly or monthly.
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You can also deposit a set amount into each account’s cash fund. That way, you can go shopping for stocks at a later date.
For example, I can transfer $25/week into my personal portfolio weekly. At the end of each month, I can shop for whichever stocks are hot (or cold) that day.
STASH also allows you to do round-ups from your checking account or transfer $1 daily into stocks. If you want to save easily, STASH is an excellent option.
Instant investing. However, you often won’t have direct access to investing in a split second. This means that you place an order, but the platform may take 3-5 hours to execute the trade.
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Large brokerages like Wells Fargo and Charles Schwab execute orders instantly. That way, if you hear about a quick tip, you can complete the move on time.
Don’t confuse investing and day-trading platforms. Traders are an entirely different story than investors. Traders make money on moves down to the second.
Most other platforms operate on a windowing schedule, which is fine 95% of the time. Surprisingly, Cash App (affiliate) allows you to make instant purchases. However, whether you get the exact prices you believe is to be determined.
Fractional shares. Large platforms don’t offer fractional shares to purchase across most securities. Wells Fargo doesn’t offer any fractional shares, so good luck with buying Nvidia (NVDA) at $430 per share.
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Most of us need fractional shares to achieve any level of investing success, so this is where the more mainstream brokerages like Cash app, STASH, and M1 Finance play best. Charles Schwab only allows fractional shares for S&P 500 stocks (big companies).
Stock choices. Did you hear of a small up-and-coming REIT that you want to purchase? Good luck finding it on a smaller platform.
If you are an income investor, you’ll only find closed-end funds and preferred shares on big platforms like Wells Fargo and Charles Schwab.
M1 Finance does have some closed-end funds, and you can purchase fractional shares. But you are out of luck if you want to add preferred shares.
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However, if you want large blue-chip companies and index funds, all platforms will serve you well. Plus, they allow fractional share purchasing of these products.
Options trading. You may want to trade options on your platform, so find one that offers this capability.
Trading calls and puts (options) is complex. Even major platforms like Wells Fargo and Charles Schwab don’t offer the complex bells and whistles to execute level 4 options trading.
However, these platforms will serve you well if you are doing level-one stuff like selling covered calls and cash-secured puts.
Be advised that you must ask for the ability to trade options. You must request each level of options trading you seek (usually 0-4). I am a level-one options trader at Charles Schwab.
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Dividends. Each platform serves its dividends to you differently. You should take the time to evaluate how each one performs compared to your needs.
I wrote “How Do You Want Your Dividends Served?” and it reviews each of my five brokerages in detail.
Income calendar. Wells Fargo has the best income calendar of my five brokerages by far. It tells me what money I have coming in and from what stock, down to the penny.
Wells Fargo may not be user-friendly, but it is the best in the business if you are looking to track your income. Charles Schwab has an income function, but it is vague.
User interface. Simple apps will initially serve you well, but eventually, you’ll want to move to a larger platform.
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You want access to news, dividend dates, historical charts, and watchlists. You will know when you need to upgrade to the bigger siblings.
Find the platform for you. As you can see, one size doesn’t fit all. Wells Fargo can do everything I need but doesn’t do fractional shares.
STASH has the best convenience and automated investing, but my favorite closed-end fund (PDI) isn’t on the platform—let alone preferred shares.
Cash App gives me dividends right to my checking debit card (I call it my Dividend Debit Card), but it doesn’t have an online website to check my portfolio (only on my phone).
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The best way to navigate the different platforms is to jump in and invest. If one is super terrible, you can transfer your holdings to another.
Conclusion. Ultimately, you’ll probably end up with 2-4 different brokerages. I didn’t even discuss things like Roth IRA abilities and tax-loss harvesting.
Investing is a massive world, so start small. You’ll know when you need to add more brokerages. I opened Wells Fargo as my first brokerage in June 2019.
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I had a couple of McDonald’s (MCD) shares in the USAA account until they transferred me to Charles Schwab. My friend told me about STASH in December 2019.
I had a Cash App account but learned about its stock market capabilities in June 2020. Finally, a YouTuber convinced me to start an M1 Fiance account in December 2020.
It’s been a great ride, and I haven’t opened a new brokerage account over the last three years. These platforms keep offering more options that make them fun and unique.
Honestly, it’s exciting to log into each of my accounts and see what’s happening. Investing is a personal affair, so that you can have it your way.
You’ll probably need multiple platforms to get everything the way you love it. Good Luck!
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