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RealtyMogul vs. Fundrise: Best Real Estate Crowdfunding?

March 3, 2024July 1, 2022 by Adam

RealtyMogul vs. Fundrise. Which Crowdfunding Platform is better for you?

Realty Mogul vs. Fundrise: At A Glance

KEY FEATURES
QUICK SUMMARY	Real estate crowdfunding platform that offers individual properties and REITs	Real estate investment platform that offers a wide variety of REITs and Funds with varying strategies and property types
MINIMUM INVESTMENT	$5,000	$10
FEES	1% for REITs, varies for individual properties	1%/yr
INVESTMENT OPTIONS	Commercial Real Estate Mult-family	Multi-family Comercial REITs Interval funds

What is RealtyMogul?

RealtyMogul is a real estate crowdfunding platform for accredited and non-accredited investors. RealtyMogul connects investors who want to invest in commercial real estate and create wealth through income or capital appreciation via REITs and private placements.

RealtyMogul was launched in 2013. To date, 240,000 individuals signed up for the platform and invested over $915 Million, financing 400+ properties valued at over $4.7 Billion.

The founders of RealtyMogul are Jilliene Helman (current CEO and Georgetown alumna) and Justin Hughes.

The company is headquartered in Los Angeles, California.

Read our complete RealtyMogul Review

What is Fundrise?

Established in 2010, Fundrise is the oldest real estate crowdfunding platform. Fundrise offers people an alternative option to investing in real estate without the stress and costs of traditional real estate investing.

Fundrise boasts a wide variety of investment options and strategies, goal-planning features, and a user-friendly investment dashboard.

More than 300,000 people use Fundrise today and have invested over $ 7 billion in properties throughout the U.S. Fundrise has had 21 consecutive quarters of returns, averaging 22.99% in 2021.

You can start investing in Fundrise’s Starter Portfolio with just $10.

Fundrise is based in Washington, DC, and was founded by Ben Miller who has over 20 years of experience in the real estate industry.

How Does RealtyMogul Work?

First, you need to open an account with RealtyMogul. There’s nothing special or complicated about opening an account with them.

1. Complete your account profile

Go to RealtyMogul.com. They ask for basic information such as name, address, etc.

2. Select your investments

Once you join, you have access to current eligible investments. Investment details are presented with key information.

RealtyMogul offers 2 types of investment options: REIT investing through either their Income REIT or Growth REIT and individual property investing. The Income REIT has an annualized distribution rate of 6.0% and has made monthly distributions for 64 consecutive quarters (since inception). Meanwhile, the Growth REIT has annualized distribution rate of 4.50%, paid quarterly.

RealtyMogul’s REITs are open to accredited and non-accredited investors with a $5,000 minimum investment. Individual property investments are only open to accredited investors with minimum investments between $25,000 and $50,000.

3. Complete your transaction

Once you are ready to invest, complete your transaction online in a few minutes.

4. Track your investments

You can track your total invested value and distributions in the investment dashboard. You will also receive quarterly investment reports and annual tax documents through this portal.

How Does Fundrise Work?

When investing with Fundrise, you are investing in either Fundrise eREITs or eFunds. Fundrise is available to non-accredited and accredited investors with a minimum investment of just $10.

eREITs and eFunds are comprised of a basket of non-traded real estate properties, from multifamily apartments to industrial complexes.

The eREITs and eFunds aim to seek a combination of dividend distribution and capital appreciation, depending on the strategy.

When you open an account with Fundrise, they offer a wide range of account levels. “Basic” accounts require a minimum investment of $10, and “Advanced Portfolio” requires a minimum investment of $10,000. “Premium” is reserved for accredited investors only with a minimum investment of $100,000.

*The main difference between investing with Fundrise and RealtyMogul is that Fundrise offers tiered investment options based on how much you invest. Meanwhile, RealtyMogul only splits its investment options between accredited and non-accredited investors.

Once you open a Fundrise account, you can view and manage your investments from one easy-to-use dashboard.

Key Features: RealtyMogul and Fundrise

RealtyMogul Key Features

Thorough investment vetting process.
Dividend Reinvestment. RealtyMogul allows for dividend reinvestment enabling investors to take advantage of compound interest.
67 months of consecutive returns through its Income REIT. RealtyMogul’s flagship Income REIT has generated 67 consecutive quarters of returns since its inception in 2016, with annualized distributions ranging from 6 – 8.5%.
Early Redemption Features. RealtyMogul offers a tiered repurchase schedule – meaning they will repurchase shares at a discount to 100% of the NAV for up to 3 years. After 3 years, RealtyMogul will repurchase shares at 100% of the most recent NAV.

Realty Mogul does not offer share repurchase programs for individual property investing, which is available to accredited investors only.

1% Asset Management Fee. RealtyMogul REITs have a 1% annualized asset management fee, paid monthly. This means you would pay approximately .0.83% per month in fees. All distributions quoted by RealtyMogul are net of fees. Fees vary for individual property investing.
The site is a platform for sponsors to raise funds. This is probably the least understood feature of real estate crowdfunding. RealtyMogul, like many crowdfunding platforms, serves as a medium for real estate sponsors to raise funds for the project. In other words, most projects on their website are managed externally.

Fundrise Key Features

$10 Minimum Investment. You can open an account and start investing in real estate with just $10.

Early Redemption Option. If investors want to redeem their shares of the eREITs or eFund, they can place a redemption request at any time. However, any eREIT or eFund redemptions processed before an investment is five years old are subject to a flat 1% penalty.

Dividend Reinvestment. If you enable dividend reinvestment, dividends earned are automatically reinvested quarterly according to your investment plan.

Create and Manage Investor Goals. This feature allows you to invest with a defined goal in mind to track your progress towards achieving your defined objectives. Investor goals are only helpful if your investment horizon is 5 years or longer.

Common goals include saving for a large purchase or retirement. The Investor goals tool is expected to show you how your portfolio could grow over time through continued investment, appreciation, and dividend/distribution income.

Once your goal is set, the goal tracker will monitor if your portfolio is on track, needs attention, or is off-track, and then guide you towards making adjustments to help you meet your goal.

Investor Goals is available to all taxable accounts beginning at the “Starter” account level.

Automated Investing. You can schedule automatic investing to your Fundrise portfolio, at any time, with $10 increments. Auto-investments are allocated according to your chosen plan, and Fundrise may offer new investments to automatically invest in as they arise.
1%/yr Fee. Fundrise charges a yearly asset management fee of 0.85% plus a 0.15% advisory fee, so 1%/yr for AUM. All dividends are net of fees. So for every $1,000 invested, you will pay $10 in fees.

Fundrise does not charge transaction fees, sales commissions, or additional fees for enabling features on your accounts, such as dividends or auto-investment.

21 Consecutive Quarters of Positive Returns. Since its inception, Fundrise has delivered 21 consecutive quarters of positive returns with a net 11.58% return across all clients since inception. Their best quarter returned 9.40%, and their worst quarter was 1.15%.

Multiple Account Levels. The Fundrise platform consists of five levels of accounts with varying minimum balance requirements. Depending on the level of account opened, you will have access to different investment options.

Fundrise’s most affordable option is its “Starter” portfolio. This low-cost package starts at $10. The portfolio includes access to Fundrise’s registered products, dividend reinvestment, and auto investing.

If you open a ‘Starter’ portfolio, you can invest in the Income Fund, which focuses on cash flow generation, or the Flagship Fund, which focuses on income and capital appreciation.

However, the Starter portfolio does not have IRA access or other advanced functionality. For $1,000, you can upgrade your account to the Basic Plan. With the Basic Plan, you can define your investment goals, open a taxable IRA, and invest in the Fundrise iPO.

Neither the “Starter” nor “Basic” plans grant access to Fundrise’s non-registered investment programs. After that, there are 3 higher-level plans which include: Core, Advanced, and Premium. These plans have a higher minimum balance, but also come with more advanced features including additional investment options such as an Opportunity Zone Fund.

Head-to-Head Comparison

Below we will see how RealtyMogul and Fundrise stack up against each other. We will examine 5 key areas: investment options, early redemption features, fees, and user experience.

Investment Options

Winner: Fundrise

In terms of the pure number and breadth of investment options, Fundrise is the clear winner. Fundrise has 11 active eReits and 2 eFunds. eREIT strategies span from income generation to Midwest Region strategies.

Meanwhile, RealtyMogul offers 2 REITs (Income REIT and Growth REIT) in addition to private placements, but private placements are only available to accredited investors. The private placement investments span debt and equity investments across multiple investment strategies and property types.

RealtyMogul

RealtyMogul offers 2 REITs for all investors and private placements to accredited investors. RealtyMogul REITs include An Income REIT and Apartment Growth REIT.

Both REITs have a minimum investment of $5,000 and are open to accredited investors & non-accredited investors.

The main benefit of commercial real estate investing through REITs is that investor spread their money across multiple properties, which will provide a higher level of diversification compared to individual property investing.

Historically, REITs have provided investors with regular income streams, portfolio diversification, and long-term capital appreciation opportunities.

RealtyMogul Income REIT

Minimum Investment: $5,000
Distribution Frequency: Monthly
Annualized Distribution Rate: 6.00 %
Property Type: Diverse
Investment Types: Debt and Equity
Open To All Investors: Yes
Objective: Income generation
Trusted: Regular audits performed by Cohn Reznick
Good For: Monthly Income

The RealtyMogul Income REIT (Real Estate Investment Trust) is a public, non-traded REIT making equity and debt investments in commercial real estate properties diversified by investment type, geography, and property type. The REIT’s objective is to provide monthly income to investors by rigorously evaluating numerous investment opportunities to find those that can support the REIT’s distribution target.

From the start, The Income REIT has distributed 64 months of consecutive distributions to approximately 6,500 investors totaling roughly $18.5 million. Anyone can invest in RealtyMogul’s Income REIT with a minimum of just $5,000, regardless of their income or net worth.

If you are interested in monthly income through real estate, RealtyMogul’s strong history of 64 consecutive months of distributions at a 6% annualized rate could be an excellent option.

RealtyMogul Apartment Growth REIT

Minimum Investment: $5,000
Distribution Frequency: Quarterly
Annualized Distribution Rate: 4.50%
Property Type: Multifamily
Investment Types: Common & Preferred Equity
Open To All Investors: Yes
Investment Goal: Growth potential and income
Trusted: Regular audits performed by Cohn Reznick

The Apartment Growth REIT is a public, non-traded REIT that invests in apartment buildings in resilient markets that can offer current income and solid growth potential. The REIT’s primary objective is to realize capital appreciation in the value of its investments over the long term through the renovation and repositioning of the multifamily properties and pay attractive and stable cash distributions to stockholders.

As of today, the Growth REIT has distributed 16 months of consecutive distributions to approximately 2,700 investors totaling approximately $4.mm. Anyone can invest in RealtyMogul’s Growth REIT with a minimum of just $5,000, regardless of their income or net worth.

Fundrise

Fundrise Has 11 active eREITs and 2 eFunds. eREIT strategies span from income generation to Midwest Region strategies. eREITs are a diverse family of funds, each pursuing a focused real estate investment strategy. Fundrise typically allocates its clients’ portfolios to a combination of eREITs, calibrating each client to specified objectives and risk tolerance.

The eFunds are comprised of an Income Real Estate Fund, whose main objective is income distribution and currently has a 6.5% distribution rate.

Their other fund is The Flagship Real Estate Fund which has an investment objective to generate income while also seeking long-term capital appreciation with low to moderate volatility and low correlation to the broader markets. The Flagship Real Estate Fund currently has a 0.75% distribution rate.

Early Redemption Options

Winner: RealtyMogul

RealtyMogul offers a tiered repurchase schedule- meaning they will repurchase shares at a discount to 100% of the NAV up to 3 years. After 3 years, RealtyMogul will repurchase shares at 100% of the most recent NAV.

Realty Mogul does not offer share repurchase programs for individual property investing, which is available to accredited investors only.

However, RealtyMogul will repurchase your shares at 100% of their value if you should pass away before the end of the 3-year vesting schedule.

98% if you held the investment for one year but less than two.
99% if you held the investment for two years but less than three.
100% if you held the investment for three years or more.
0% if you held the investment for less than a year.

For example, if you held your RealtyMogul for 1.5 years, your redemption rate would be 98% X the most recent NAV.

Fundrise charges a 1% flat fee for any redemption request that is less than 5 years old. After 5 years, Fundrise will repurchase redemptions at full value, with no fee or penalty.

Also, neither platform can guarantee liquidity options but does so on a best efforts basis. Both companies will repurchase at the effective repurchase rate multiplied by the most recently announced NAV per share.

Fundrise: If investors want to redeem their shares for the eREITs or eFund, they can place a redemption request at any time.

However, after a request is submitted, Fundrise typically processes the requests quarterly for the eREITs, and monthly for the eFunds after a minimum 60-day waiting period.

It’s important to note that while under normal market conditions Fundrise seeks to provide investors with liquidity through the redemption plan, during a financial crisis, investors should expect us to pause the redemption plan long enough to allow enough time for whatever events may unfold.

Fees

Winner: Tie

When real estate crowdfunding platforms mention fees, they usually refer to their monthly asset management fee. Both RealtyMogul and Fundrise have a 1% management fee.

RealtyMogul REITs have a 1% annualized asset management fee, paid monthly. This means you would pay approximately .0.83% per month in fees. All distributions quoted by RealtyMogul are net of fees. Fees vary for individual property investing.

Fundrise has a 1% fee for assets under management. Fundrise charges a yearly asset management fee of 0.85% plus a 0.15% advisory fee, so 1%/yr. All dividends are net of fees. For every $1,000 invested, you will pay $10 in fees.

There are often additional fees baked in offering circulars, such as organizational and operating costs, and upfront selling costs. It’s really just a matter of how the platform presents the fees to you, which can sometimes be misleading and hard to understand.

Returns

Winner: Fundrise

Individual returns can vary depending on investment strategy and goals i.e., income generation vs. capital appreciation, so it’s hard to compare apples to apples.

That said…

Across all clients, Fundrise returned an average annualized return of 11.58%, net of fees. RealtyMogul has not listed its returns across all clients, but it has made 67 consecutive monthly distributions between 6% and 8% through its Income REIT since 2016.

For example, the RealtyMogul income REIT has made 67 consecutive monthly distributions since its inception in 2016, showing a strong track record in its REIT offerings, while Fundrise’s Income Fund has only been around since April 2022, so it’s hard to give a truly accurate comparison.

Income Funds Compared:

Since 2016, the RealtyMogul Income REIT has delivered 67 consecutive months of distributions to shareholders, with an annualized distribution rate between 6% and 8%. Meanwhile, Fundrise’s Income Real Estate Fund, which was launched in April 2022, has a current distribution rate of 6.5%. Given RealtyMogul’s strong track record, they take the W in the income category.

Fundrise Total Returns:

From 2017 – 2021, Fundrise returned an average annualized return of 11.58%, net of fees across all clients. Compared to all public REITs, which returned 13.4% and 19.21% for the S&P 500.

It’s important to note that your total returns could vary depending on your chosen plan and investment objective.

Fundrise has had 21 consecutive quarters of positive returns, with their best quarter returning 9.40% and their worst quarter being 1.15%.

Both the S&P500 and all public REITs had only 17 consecutive positive returns, with their best quarters returning 20.54%/16.70% and worst quarters returning -19.60%/-25.42%, respectively.

Year	Fundrise Returns
2022 Q1	3.49%
2021	22.99%
2020	7.31%
2019	9.16%
2018	8.81%
2017	10.63%

PROs & CONs

REALTYMOGUL PROS

Consistent Income: The Income REIT has distributed 67 months of consecutive distributions with an annual distribution rate of 6-8% since its inception in 2016.
Thorough Due Diligence: RealtyMogul has a rigorous vetting process – to date, only 1.1% of opportunities have been funded.
Retirement Account Investing: You can invest in a retirement account through a self-directed IRA (SDIRA).
Diversification: Cash flow from equity and debt investments create diversification across the capital stack.

REALTYMOGUL CONS

High minimum investment
Fewer investment opportunities vs. competitors

FUNDRISE PROS

Strong Track Record: 21 consecutive quarters of returns, averaging 22.99% across all investors in 2021.
Low Minimum Investment: Open an account with just $10
History: Most mature crowdfunding platform – founded in 2010
Customized Recommendations: Real estate portfolio recommendations are created for your risk tolerance.
Multiple Investment Strategies: Depending on your goal, they offer income generation and capital appreciation.
Mobile App: Fundrise is one of the few real estate platforms that offer non-accredited investors a mobile app.

FUNDRISE CONS

Longer Investment Horizon: The investment horizons on Fundrise are typically quite long, often five years or more. If you want to see quicker returns, Fundrise may not be the best choice.
Lack of Control: While Fundrise’s management of properties can be a pro for some, it could be a con for others who prefer to have direct control over their real estate investments.
Early Redemption Fees: While Fundrise does offer liquidity options if an investor wants to sell their shares early, there is a 1% early redemption fee if you held your shares less than 5 years.

Which is Better?

RealtyMogul’s Income REIT is an excellent option if you are looking for income generation. Its strong track record of consecutive monthly returns makes it an easy sell. If you are a beginner investor, RealtyMogul offers only 2 investment options for non-accredited investors making the selection process a bit easier.

However, if you are looking for a more customized investing approach, then Fundrise is a better bet. They offer a more comprehensive range of investment options across multiple strategies and geographical locations.

Overall, both companies have a solid operating history, but Fundrise offers more perks and features like creating and managing investor goals and a mobile app.

Alto IRA Review 2024: Do You Need An Alternative IRA?

August 22, 2024May 31, 2022 by Adam

Quick Summary:

Alto is an administrator (akin to your 401k or 403B provider) of self-directed individual retirement accounts. The company facilitates the ability to invest in cryptocurrencies and alternative investments.

Overall Rating:

Stock Analysis:

Tools & Features:

Ease of Use:

Price:

PROS

Multiple investment options
Simple fee structure
Tax benefits through IRA investing
Multiple investment options

CONS

No stock or ETF trading
It could be cheaper if you invest directly with a sponsor

At A Glance:

About	A self-directed IRA enables individuals to invest in cryptocurrencies and alternative investments
Minimum Investment	$10 for crypto Varies for other investments
Fees	1% transaction fee for crypto $10 a month, plus an execution fee for alternatives
Crypto Investment Options	150+ coins and tokens. Bitcoin, Doge, Ethereum
Types of Accounts	Traditional IRA, Roth IRA, Sep IRA
Retirement Account Rollovers?	Yes
Alternative Investment Options	75+ options. Real Estate, Art, Music Royalties, Crowdfunding

What is Alto?

The company offers two types of IRAs: Alto CryptoIRA and AltoIRA.

The Alto CryptoIRA allows individuals to invest in over 150 cryptocurrencies and tokens through their integration with Coinbase, while the AltoIRA offers over 75 alternative investment options for accredited and non-accredited investors alike.

How Does Alto Work?

Alto IRA is a company that specializes in providing Individual Retirement Accounts (IRAs) that allow investors to invest in alternative assets. Alto IRA provides a unique investment platform that allows for diversification beyond traditional stocks and bonds within a retirement account.

Here’s how Alto works:

Account Creation: You start by creating an account with Alto IRA, where you will choose the type of IRA you want, such as a Traditional IRA or a Roth IRA.
Funding: You fund your account through a transfer or rollover from an existing retirement account or by making a contribution.
Choosing Investments: Alto IRA gives you the flexibility to invest in alternative assets like private equity, real estate, precious metals, and startups.
Investment Process: They facilitate the investment process by handling all the necessary paperwork and coordinating with investment sponsors.
Fees: Alto IRA generally charges an account setup fee and ongoing administration fees, which can vary based on the investments and account balance.
Tax Advantages: Depending on the type of IRA you choose, your contributions, earnings, and withdrawals may have certain tax advantages.
Monitoring and Reporting: You can monitor your investments and track their performance through the Alto IRA online platform.
Distribution and Withdrawals: You can make withdrawals according to the rules that apply to your specific IRA type, keeping in mind potential penalties for early withdrawal.
Customer Support: Alto IRA offers support and education to help you make informed investment decisions.

Who Should Use Alto?

AltoCryptoIRA and AltoIRA are a good option if…

You are interested in alternative investments and need a little help getting started.

What Is A Self-Directed IRA?

A self-directed IRA is an individual retirement account that allows individuals to invest in alternative assets that are typically prohibited from traditional IRA accounts.

Self-directed IRAs are available as a Traditional IRA (in which you make tax-deductible contributions) or a Roth IRA (contributions are made on an after-tax basis, but distributions are tax-free).

Anyone can open a self-directed IRA, and the contribution limits are the same as a regular IRA – $6,000 per year.

Alto Crypto IRA Explained

With an AltoCrypto IRA, you can invest in over 150 cryptocurrencies and tokens. You can use your IRA to buy, sell, and trade through Alto’s integration with Coinbase.

There is a minimum investment of $10 and a 1% trading fee per transaction.

You can rollover or transfer funds from an existing traditional Roth, SEP, or SIMPLE IRA and rollover or transfer funds from a 401(k) or 403(b).

Crypto IRA Summary

Crypto IRA Minimum Investment	$10
Fees	1% of transactions, no other monthly fees
Number of Investment Options	150
Types of Investors?	Open to all investors (accreditation not required)
Trading Windows	24/7
Other Features	Concierge service to help set up your account
Rollovers Available?	Yes
Security	Hot and cold storage, FDIC-insured cash
Tax Reporting?	Yes, managed by Alto

Note: Crypto IRAs only allow you to hold cash and cryptocurrencies. To invest in alternatives, you need to open an Alto IRA. You can open multiple types of IRAs through Alto.

Alto IRA Explained

The Alto IRA enables individuals to invest in assets that are not publicly traded. Alto partners with over 75 alternative investment companies to provide users with a truly diversified range of investment options.

Minimum Investment	Starts at $25 per month
Types of Investments	75+ Options. Real Estate, Crowdfunding, Private Equity, Art, Music Royalties
Fees	Monthly Account Fee: $25 Partner Investment Fee $10 -$50 [Only applied when the transaction is executed]
Accreditation required?	Monthly Account Fee: $25 Partner Investment Fee $10 -$50.Only applied when the transaction is executed

You can invest in over 75 types of alternative investments with the Alto IRA.

Both the minimum investment and fee vary depending on the partner. However, Alto does charge a $25 per month fee to cover its own costs.

Investment options include well-known platforms such as Masterworks, Prosper, and Franshares.

Alto Investment Platform — **Browse all alternative investments to find investments that fit your needs**.

How Do I Open An Account?

Alto has an easy 4 step process to open a Crypto an Alto IRA.

Create an account. Get started with an Alto IRA or CryptoIRA. Or Both!
Select the type of account (Traditional, Roth, or Sep)
Fund your account. Using cash or roll-over an old retirement account
Start Investing. Choose from over 75 partners or 150+ cryptocurrencies and tokens

Start Investing

Fee Structure

Alto’s fee structure varies depending on whether you have an Alto IRA or an Alto Crypto IRA.

There are standard maintenance, opening, and closing fees with both types of accounts.

Fee Type	Alto Crypto IRA	Alto IRA
Account Fee	$0	$10/$50 mo
Custody Fee	$0	$0
Trade Fee	1%	$0
Partner Investment Fee	$0	$10/50 mo
Account Closure Fee	$50	$50
Outbound Wire Transfer	$25	$25

The main difference in the fee structure between the two IRAs is that the Alto IRA has a monthly account fee and a partner fee when a transaction is executed. The crypto IRA does not have these fees, but instead a 1% fee of trade notional when a transaction is executed.

How Does Alto Compare?

Crypto and alternative asset IRAs are still fairly nascent in the investment world. There are a handful of up-and-coming competitors in the IRA space.



Monthly Fee	$10 - $25/month	$15 - 30/month	$0
One-time Set Up Fee	$0	$360	$0
Minimum Investment	$10/Crypto $50/Alternatives	Varies	$1,000
Types of Accounts	IRA	IRA Solo 401k	IRA
Types of Investors	Open to all investors	Open to all investors	Open to all investors
		Rocket Dollar Review	iTrust Capital Review

Is An Alto IRA Worth It?

Yes! Alto IRA is worth it if you are interested in investing in alternatives but are unsure where to start.

The main value add is that Alto streamlines the investment process while providing a wide variety of cryptocurrencies and alternative assets in one easy-to-use platform.

But for this usability, Alto charges a monthly fee and a transaction fee.

That said, if you are an experienced investor, you can save a few bucks by investing directly with the platform.

So, if you think the streamlined process is worth the monthly fee, then Alto is a great option for you.

Frequently Asked Questions

Is Alto Legit?

Yes, Alto is legit! Alto prioritizes industry-leading security measures. Its integration with Coinbase gives you the added bonus of offline asset storage and insurance coverage.

Do I Need To Be An Accredited Investor To Sign-Up?

No. Alto is open to non-accredited and accredited investors alike. However, some, but not all, alternative investment options require accredited investor status.

What Are Tax Benefits To Using An Alto IRA?

The Alto IRA puts the investor in the driver’s seat of their retirement account, allowing them to select the investments they want while maintaining the same tax advantages as other IRA accounts.

Does Alto Have An App?

They do not currently have an app available.

Domain Money Review 2024: An All-in-one Wealth Management Service

September 6, 2024April 12, 2022 by Adam

Domain Money is an all-in-one wealth management service that provides investment management and much more.

Quick Summary:

Domain Money is an all-in-one wealth management service that helps you manage your entire financial life with a dedicated Financial Planner.

Overall Rating:

Tools & Features:

Ease of Use:

Price:

PROS

Transparent Pricing
No Minimum Investment

CONS

Pricey
New Company

Price:

$2,500 – $7,500

Features:

Dedicated Financial Planner

External Portfolio Review

Mobile App:

Current Promotions:

None listed

SIGN UP FOR FREE

What is Domain Money?

Domain Money is an all-in-one wealth management app that helps you manage your entire financial life with a dedicated Certified Financial Planner.

Founded by industry experts who developed Clarity Money and Marcus by Goldman Sachs, Domain built a set of proprietary technologies and processes that radically streamline the time it takes to deliver its services.

Utilizing a team of specialists behind the scenes who handle specialized tasks, such as Certified Public Accountants (CPAs) and investment management specialists, their advisors can focus their time and attention on their clients.

How Does Domain Money Work?

Domain Money’s key offering is its financial Planner service.

When you sign up for Domain Money, they will connect you with an investment advisor investment advisor who is registered as a CERTIFIED FINANCIAL PLANNER™ Professional (CFP® Professional).

Unlike other platforms, Domain’s Financial Planners are actual company employees, which means customers are treated with the highest standard of care to act in the best interests of their clients.

Domain CFPs are fiduciaries, which means they are legally required to manage your money for your benefit, not theirs.

NOTE: Domain does not use AI to deliver financial advice. Their approach ensures a highly qualified human advisor, who is dedicated to your account and oversees all financial advice.

Domain does not charge fees based on your chosen products, meaning their advice is entirely objective and helps align their interests with their clients.

Your Domain advisor will collaborate with you to recommend the most suitable account type and asset allocation based on various factors, including your objectives, risk tolerance, and future plans.

The investment advisor will help you construct cost-effective portfolios with a high level of diversification, primarily using exchange-traded funds (ETFs) and index funds.

Try DOMAIN Money

Key Features

As an all-in-one wealth management app, Domain Money offers various financial services to keep your money in order.

One Page Plan

The One Page Financial Plan provides a tactical guide for those starting out and wanting to optimize their financial resources.   

This is a 90-minute financial planning session with an actionable One Page Plan to clean-up your current finances and get you on track for your financial goals.

The one-page plan charges a flat fee of $2,500.

Strategic Plan

The Strategic Financial Plan enables clients to choose up to three financial areas on which to focus and receive customized advice and recommendations.   

The most common areas are cash flow, home affordability and retirement. This plan includes two meetings and one month of unlimited phone and email access.

The strategic plan charges a flat fee of $4,500.

Comprehensive Plan

The Comprehensive Plan includes everything in your life with a dollar sign, and while the numbers form the foundation for the plan, it is your goals and values that drive the recommendations. Financial areas include goal setting, cash flow analysis, debt management, investments, tax planning, real estate, education savings, retirement planning, insurance and estate planning.   

The Comprehensive Planning process is a six-month engagement and consists of four meetings to actively help you implement the plan and keep you accountable.

The comprehensive plan charges a flat fee of $7,500.

Pricing & Value

Domain Money’s pricing is transparent and simple.

Is Domain Money Worth It?

Domain Money offers an interesting opportunity to streamline personal finance and wealth management. If you are overwhelmed by managing your finances or don’t want to deal with the details, then Domain Money is worth it.

SIGN UP TODAY

Frequently Asked Questions

Is Domain Money Legit?

Yes, Domain Money is legit. The company was founded and is run by Adam Dell (brother of Dell Computer founder Michael Dell). Before founding Domain Money, Dell was a partner at Goldman Sachs – Marcus.

Our Review Methodology

Investing in the right financial products is crucial for achieving your financial goals. That’s why our review methodology is designed to give you a comprehensive understanding of various investing platforms and tools. Here’s a breakdown of what we focus on:

Tools and Features

We dig deep into the suite of tools that each platform offers. Whether it’s automated investment features, tax optimization, or specialized charting tools, we evaluate how these features contribute to smarter investing decisions. We ask questions like:

What is its main offering, and how does it compare to its peers?
How effective are the risk assessment tools?
Are there any value-added services like educational content?

Price and Value

Price matters, especially when it comes to investing, where every penny counts. We analyze:

Subscription fees
Hidden Charges
Price compared to the overall value received

We’ll let you know if the platform gives you the most bang for your buck.

Ease of Use

User experience can make or break an investment platform. We assess:

Interface Design – Is it intuitive and easy to use?
Mobile app availability and functionality
Customer Support – where applicable.

Nobody wants to navigate a clunky interface when dealing with their hard-earned money.

How We Do It

Hands-On Testing: I signed up for Domain Money to provide real insight. This is how I give my unique perspective. We’re unlike some other sites where they simply rehash marketing materials.
Customer Reviews: What are other users saying? We look at reviews and customer feedback to gauge public opinion.
Comparative Analysis: Finally, we compare each platform against competitors regarding features, pricing, and user experience.

Fractional Shares: Big Opportunities with Small Investments

May 12, 2024April 3, 2022 by Adam

Trading fractional shares is an excellent way for beginner and intermediate investors to gain exposure to stocks and ETFs with a small amount of capital.

What Are Fractional Shares?

Fractional shares are just what they sound like: fractions of a single share of a stock, mutual fund, or index fund.

Traditionally, if you wanted to invest in a company’s stock, you had to buy at least one whole share. However, some companies’ shares can be quite expensive, which might make it challenging for some people to invest in them. For instance, a single share of companies like Amazon or Google could cost several thousand dollars.

With fractional shares, you can invest in these companies with less money. For example, if a share costs $1,000 and you have only $100 to invest, you could buy 0.1 shares of that stock.

The main advantage of fractional shares is that they democratize investing by making it more accessible to people with less money to invest. They also allow investors to build diversified portfolios with less capital, so if you’re learning how to become an investor, fractional shares are a great place to start.

How does Fractional Share Investing Work?

Generally, you can place orders to buy or sell fractional shares in dollars or share amounts. For example, if XYZ Stock trades for $1000, you could place an order for a fractional share, such as .5 shares, or a dollar amount, such as $500.

How you buy and sell fractional shares differs between brokerage firms that provide this service to their customers.

When you purchase fractional shares, you are still entitled to dividends. So, if you buy 1/5th of an Apple share, you will also get 1/5th of the dividend.

PROs of Fractional Share Investing

Accessibility

One of the most significant benefits of fractional share investing is the ability to invest in expensive stocks like Tesla, Apple, or Google that might be otherwise too expensive for your average investor.

Tesla trades at nearly $1,000 a share, which is not cheap. But with M1 Finance, you can gain exposure to Tesla by purchasing a fractional share for as little as $1.00!

Before fractional share investing, expensive stocks were just out of reach for beginner investors. Fractional share investing is democratizing stock market investing for the average investor.

Put Your Extra Cash To Work

If you have extra cash in a savings account, you can put that money to work by investing in fractional shares. Otherwise, you earn close to 0% interest in your savings account.

Dividend & Corporate Actions

When you are a fractional shareholder, you are still entitled to fractional dividends and other corporate actions such as stock splits or reverse stock splits.

For example, If you purchased $100 worth of company X that trades at $1,000 and the company’s dividend is $10 per share, you own 1/10th of that company, so you would receive a dividend of $1.00.

Note: Depending on your broker, if your dividend amount is less than 1 cent, your broker may keep the dividend.

Dollar-Based Investing

With fractional share investing, if you have a specific asset allocation, fractional shares allow you to execute that strategy precisely by buying securities in dollar amounts, not shares. This gives you greater control over your portfolio allocation and creates a more diversified portfolio.

Consistent Investment

Fractional shares are great for consistent, regular investing. Suppose you’re using a strategy like dollar-cost averaging (investing a fixed amount of money at regular intervals, regardless of the share price). In that case, you can continue investing the same amount even when share prices increase.

Not All Securities Are Available For Fractional Share Investing

Depending on your broker, the stocks and ETFs available for fractional share trading may vary. You can purchase most large-cap securities in the S&P 500 via fractional shares, but don’t expect that company that went public via a reverse merger to always be available for trading.

Not All Brokerages Offer Fractional Share Investing

Many more traditional brokerages (think TD Ameritrade) do not offer fractional share investing; however, that is likely to change. Fractional share investing is more prevalent at fintech brokerages like M1 Finance or Robinhood, geared towards a younger generation of investors.

Fractional Shares Cannot Be Transferred To Different Brokerage Accounts

You cannot transfer fractional shares to a different brokerage account. If you decide to change brokers, you may be forced to sell your fractional shares and incur capital gains taxes.

This isn’t likely a huge issue for most investors, but something to be aware of.

Limited Trade Execution

Depending on your broker, some brokerages aggregate fractional share buy and sell orders for clients and only execute once or twice daily instead of in real-time, like full shares. And because of this, you may be unable to execute at the best price of the day.

Furthermore, some companies make fractional share trading available only on their mobile app and only allow market orders.

Again, not a problem for most people, but people should be aware.

Voting Rights

Depending on your broker, you may not have voting rights if you own fractional shares. Some brokerage firms allow it with special procedures, and some do not allow it. Ask your brokerage firm whether you will have any voting rights associated with fractional share purchases.

Liquidity Concerns

Selling fractional shares might be more complicated than selling full shares. Some brokerages may only allow the sale of fractional shares under certain conditions, such as during a full account transfer or closure.

Best Fractional Share Brokers

Some popular fractional share brokers include:

The Bottom Line: Are Fractional Shares Worth It?

Trading fractional shares are an excellent way for beginner to intermediate investors to gain exposure to stocks and ETFs. While this new way of investing offers considerable upside, investing still involves risk, so you should still do your research and invest wisely.

Frequently Asked Questions

Can I buy fractional shares of ETFs?

Yes! However, exchange traded Funds (ETFs) that allow trading in fractional shares may vary from broker to broker.

Are there any fees to buy fractional shares?

Most brokers do not charge fees to buy fractional shares, but they may vary. M1 Finance does not charge any fees to purchase fractional shares.

How Are Fractional Share Different From DRIPs?

The underlying concept between DRIP and fractional shares is the same; the ability to purchase The underlying concept between dividend reinvestment plans (DRIPs) and fractional shares is the same; the ability to purchase fractional ownership of securities. However, DRIPs require you to own at least 1 share, and you either have to opt-in or opt-out of the program. Whereas fractional share investing is buying fractional shares you may not already own.

Can I Buy Fractional Shares of VOO?

Yes, you can buy fractional shares of VOO with as little as $1 dollar through Vanguard. Also, brokers like M1 Finance and Public also allow for buying fractional shares.

5 Best Fundrise Alternatives for Real Estate Investing in 2024

January 1, 2024January 13, 2022 by Adam

Before opening an account with Fundrise, consider these 5 Fundrise alternatives before investing in real estate crowdfunding.

Fundrise is one of the most popular crowdfunding platforms that allow individuals to invest in real with just $10. However, Fundrise is just one of many real estate platforms out there. Some platforms focus on consistent income, others on capital appreciation, and some are only open to accredited investors.

1. Groundfloor

Minimum Investment: $10
Average Returns: 10%
Fees: None. Borrower pays
Investment Length:
Accreditation Required: No

Groundfloor is one of my favorite Fundrise alternatives. Groundfloor is a real estate crowdfunding investment platform that allows non-accredited individuals to invest in short-term real estate debt.

This real estate crowdfunding platform makes short-term loans between 6 – 12 months with interest rates between 7.5% and 14% to real estate “flippers” who fix and flip individual investment properties.

Like Fundrise, Groundfloor has only a $10 minimum investment but does not charge the investor any fees, making it a great alternative to Fundrise. But unlike Fundrise, Groundfloor notes have an average duration of 6 – 12 months, so you don’t need to lock up your money for 5 years as you do with Fundrise.

In addition, Groundfloor notes are collateralized, meaning that the property secures the loan in the case of default.

Before opening a loan to investors on their platform, Groundfloor thoroughly vets a borrower’s experience, creditworthiness, and business plan. Then, they assess the property value on an as-is and as-improved basis.

Read our complete Groundfloor vs. Fundrise comparison

Top 5 Reasons Why Groundfloor Is An Ideal Fundrise Alternative

Short-term investment timeline (6 – 12 months). Most other real estate platforms lock up your money for 5 years.
Loans are secured by collateral. In case of default, an added level of protection to help recoup investors’ money.
No investor fees. The borrower pays the fees.
Greater Investment Control. Groundfloor allows you to fund multiple investments at once.
Groundfloor prefunds most loans before they are sold on its platform. This shows that Groundfloor has faith in its investment selection process. Because if the loan does not meet investors’ standards, they could be stuck with the loan.

2. RealtyMogul

Minimum Investment: $5,000
Average Returns: Varies
Fees: 1% for REITs
Investment Length: 5 years
Accreditation Required: No

RealtyMogul is a real estate investing platform for accredited and non-accredited investors. RealtyMogul connects individuals who want to invest in commercial real estate and create wealth through income or capital appreciation via REITs and private placements.

Since its inception, RealtyMogul has only accepted 1.1% of submissions to its platform, providing peace of mind that this platform undergoes a thorough vetting process.

If you want to generate income through real estate, RealtyMogul is a great Fundrise alternative. Their Income REIT has generated 67 consecutive months of returns since its inception in 2016, with annualized distributions ranging between 6% – 8.5%.

Read our complete Realty Mogul Review.

Alternatively, suppose you are more interested in capital appreciation. In that case, RealtyMogul’s Apartment Growth REIT focuses on capital appreciation while maintaining a solid distribution rate of 4.5%, making this REIT an excellent alternative to Fundrise.

However, if you are looking for a wider variety of investment options and strategies, you may be better off with Fundrise. RealtyMogul only offers two REITs for non-accredited investors, limiting your investment options. Furthermore, RealtyMogul has a high minimum investment of $5,000, creating barriers to entry for some individuals.

For a more in-depth comparison of RealtyMogul and Fundrise, Read our full RealtyMogul vs. Fundrise comparison.

3. DiversyFund

Minimum Investment: $500
Average Returns: Targets 10% – 20% IRR
Fees: 2% Asset Management Fee
Investment Length: 5 years
Accreditation Required: No

DiversyFund is a real estate crowdfunding platform that invests in multifamily real estate through a Non-Traded REIT (Real Estate Investment Trust). This real estate platform is open to non-accredited investors with a minimum investment of $500.

DiversyFund currently offers one investment option open to all investors: The DiversyFund Growth REIT II. The Growth REIT is designed to build wealth over 5 years using a value-add appreciation strategy. However, be prepared to commit as DiversyFund offers no early redemption options.

In addition, all dividends earned with DiversyFund are reinvested, and investors in the fund do not realize any profits until DiversyFund sells the assets.

But a key feature that makes DiversyFund a great Fundrise alternative is they own and manage all their properties. Many real estate crowdfunding platforms serve as a middleman, commonly referred to as the deal’s sponsor, connecting investors with developers. DiversyFund manages the entire process in-house. For some investors, this can provide peace of mind and illustrates the company is well positioned and manages an end-to-end real investing deal.

In addition, the fund managers (DiversyFund) have their own money invested with Diversy, commonly known as skin-in-the-game. This shows an alignment between investors and owners.

4. Streitwise

Minimum Investment: $5,000
Average Returns: 3% upfront, 2% ongoing
Fees: ~~3% upfront~~ Upfront fee now waived, 2% ongoing
Investment Length: 5 Years
Accreditation Required: No

Streitwise is a real estate investment company that enables accredited and non-accredited investors to invest in commercial real estate through a non-traded equity REIT. Streitwise’s current offering is a professionally-managed, tax-advantaged portfolio of real estate assets.

Since its inception, the company has delivered 21 consecutive quarters of 8% annualized returns.

Below are some of Streitwise’s key features that make it an excellent Fundrise alternative.

Over $5 million skin-in-the-game. The founders invested over $5 million in their own money with Streitwise. This means there is a shared alignment between the owners and investors. Fundrise owners do not have much money invested in Fundrise REITs and Funds.
Streitwise owns and operates all of its investments. Why does this matter? Most other real estate crowdfunding platforms serve as intermediaries for 3rd party companies, receiving a portion of the profits and costing investors more money.
Transparent Fee Structure. Streitwise is upfront about its fee structure. There are no hidden fees buried in its offering documents. While a ~~3% upfront~~(upfront fee now waived) and 2% ongoing fee seems steep, Fundrise advertises a 1% management plus many other fees buried in its offering circular.
Modest Leverage. Streitwise only borrows 50% to fund its current project. Modest leverage reduces risk and maximizes returns. Especially in the current market environment, modest leverage makes for a safer investment.

To find out more, read our full Streitwise Review.

5. Roofstock

Minimum Investment: $0
Average Returns: Varies by property type
Fees: o 0.5% of the contract price or $500, whichever is higher.
Investment Length: Varies
Accreditation Required: No

Roofstock operates differently than other real estate platforms. With Roofstock, you can enjoy the benefits of owning a rental home without the traditional hassles of being a landlord.

This innovative real estate platform facilitates the purchases of single-family rental properties. This means you buy a physical rental property, not a share in a REIT like most other platforms. However, Rooftstock differentiates itself by providing property management services, so you don’t have to deal with tenants or other responsibilities associated with being a landlord.

While you aren’t required to be an accredited investor to buy a rental property, the cost is significant, with properties starting at around $50,000. So Roofstock is an excellent alternative if you are interested in purchasing physical real estate without the stress of property management.

Read our complete Roofstock Review

How to Choose the Best Fundrise Alternative?

There are numerous fundrise competitors that make picking the best platform for you challenging. We considered several factors to come up with a list of Fundrise Alternatives.

Below is the list of factors to consider when investigating Fundrise alternatives.

1. Holding Period & Liquidity

Real estate, in general, is considered an illiquid investment, and most real estate platforms have a 3 – 5+ year holding period with limited liquidity options and fees if you want to sell back your shares early. Groundfloor has the shortest holding period with an average duration of 6 -12 months. Meanwhile, DiversyFund has no early redemption options; you are required to invest for 5 years.

Fundrise allows for early redemptions with associated fees and caveats. For example, you are subject to a 1% penalty if the redemption request is within 5 years of your initial investments. In addition, Fundrise does not guarantee liquidity. Under normal market conditions, Fundrise will seek to provide liquidity through its redemption plan, but during a financial crisis or extreme market conditions, Fundrise may temporarily pause redemptions.

Note: Investors in the Fundrise Income Real Estate Fund can redeem their shares quarterly without penalty or cost.

2. Investing Strategy

Fundrise offers a wide range of investment strategies, from fixed income in its Income Real Estate Fund, which is an interval fund, to Opportunistic investments, which have the potential for the greatest total return but often have very low to no quarterly distributions.

If you invest in an eREIT or eFund, the portfolio may consist of some, all, or a combination of the Fundrise investment strategies.

So, when considering some of the other real estate platforms on the list, assess their strategies and your goals to ensure alignment before investing.

3. Minimum Investment

Before picking a real estate investment platform, consider the minimum Investment and if tiered accounts limit your investment options and available features.

For example, while Fundrise advertises a low minimum investment of $10, you are limited to investing in their eFunds with this investment amount. It’s not until you invest at least $5,000 that you will have access to most Fundrise features.

Groundfloor also has a $10 investment minimum, but there are no tiered accounts, and all non-accredited have access to the same investments.

Fundrise Alternatives for Accredited Investors Only

If you meet the qualifications, there are a couple of high-quality real estate platforms for accredited investors.

Fund That Flip

Minimum Investment: $5,000
Average Returns: Varies
Fees: 1 – 3%
Investment Length:
Accreditation Required: Yes

Fund That Flip is similar to Groundfloor because this platform focuses on crowdfunding pre-vetted investments in fix-and-flip, new construction, and rental properties with increments of $5,000. Less than 8% of applicants are approved, and 93% are repeat customers on the platform.

In addition, the company offers the ability to invest in pre-funding and bridge notes with increments of $1,000.

Read our complete Fund That Flip Review

EquityMultiple

Minimum Investment: $10,000
Average Returns: Varies
Fees: 0.5% to 1.5% AUM + 10% Profits
Investment Length: Varies
Accreditation Required: Yes

EquityMultiple offers 3 types of investment options for your portfolio. Options include fund investing, direct investing, and a savings alternative.

EquityMultiple offers a diverse mix of direct, fund, and tax-deferred commercial real estate investments from different property types and locations. The company focuses on the mid-market, commercial real estate space, with investments reflecting a diverse array of multi-tenant properties.

Their offerings span the entire capital stack and a variety of risk/return profiles. All investments are managed by experienced companies and overseen by EquityMultiple’s in-house Asset Management Team.

Given the wide range of strategies and investments, EquityMultiple is probably the most diverse regarding Fundrise alternatives for accredited investors.

SPY vs. VOO: Is There Actually A Difference Between These ETFs?

May 27, 2024January 5, 2022 by Adam

SPY vs. VOO: The Ultimate Showdown of Two Heavyweight ETFs. Which One Deserves a Spot in Your Investment Portfolio?


Features	SPY	VOO
Inception Date	January 1993	September 2010
Issuer	State Street Global Advisors	Vanguard
Gross Expense Ratio	0.09%	0.03%
10 Year Returns	+14.55%	+14.47%
Total Assets	$362 Billion	$739 Billion
Average Daily Volume	74,076,818	3,957,740

If you want to learn how to invest in index funds, two great options are SPY and VOO, exchange-traded funds that track the S&P 500.

In this blog post, we’ll explain the similarities and differences between these two investments.

Let’s get into it.

What is VOO?

VOO is the ticker symbol for the Vanguard S&P 500 ETF. Similar to SPY, it’s an exchange-traded fund that aims to track the performance of the S&P 500 Index. The index comprises 500 of the largest U.S. publicly traded companies, covering a broad swath of the American economy.

Vanguard is known for its low-cost investment products, and VOO is no exception. Its expense ratio is lower than that of other S&P 500 ETFs like SPY, making it a popular choice for cost-conscious investors.

Both retail and institutional investors often include VOO in their portfolios for diversified exposure to the U.S. stock market. It’s a straightforward way to invest in a broad range of companies without picking individual stocks.

VOO can be a core holding in a long-term investment strategy due to its diversification and low cost. It’s also useful for those looking to implement strategies like dollar-cost averaging or passive investing.

You can visit Vanguard’s official page for the VOO ETF: Vanguard S&P 500 ETF for more details.

What is SPY?

SPY is the ticker symbol for the SPDR S&P 500 ETF Trust. This exchange-traded fund (ETF) tracks the S&P 500 index.

The S&P 500 index includes 500 of the largest publicly traded companies in the U.S. The SPY ETF aims to mimic its performance. It’s one of the most popular and highly traded ETFs in the market.

Investors often use SPY as a quick way to get exposure to the U.S. stock market. It’s considered a relatively low-cost and efficient way to diversify your portfolio.

For more in-depth information, visit SPDR’s official page on SPY: SPDR S&P 500 ETF Trust.

How Are They Different?

While SPY and VOO both track the returns of the S&P 500, there are some key differences between these two funds.

Structure

The main difference between SPY and VOO is how the two funds are structured.

VOO is an ETF managed by Vanguard, known for its passive index-tracking investment approach. State Street Global Advisors manage SPY, and the fund is structured as a unit investment trust (UIT), which has certain tax advantages but can also result in tracking errors compared to its benchmark index.

Expense Ratio

The expense ratio is the annual fee charged by the fund to cover operating expenses like management fees, administrative expenses, and other costs. It is expressed as a percentage of the fund’s assets under management.

As of this writing, the expense ratios for VOO and SPY are as follows:

VOO Expense Ratio: 0.03%. This means that for every $10,000 invested in VOO, the annual management fee would be $3.
SPY Expense Ratio: 0.09%. This means that for every $10,000 invested in SPY, the annual management fee would be $9.

So, VOO has a lower expense ratio than SPY, making it a more cost-effective option for investors who want to track the S&P 500 index. It’s not a huge difference, but it can lead to a substantial investment amount of investment profit you are leaving on the table over time.

However, it is important to note that the performance of VOO and SPY may differ due to differences in their tracking methodology and other factors, such as trading volume and liquidity.

Liquidity

Another key difference between VOO and SPY is liquidity. Liquidity is how much trading volume there is for a particular stock, ETF, or option.

SPY has historically had higher trading volumes and greater liquidity than VOO due to its longer history as the first ETF tracking the S&P 500 index.

As of this writing, the average daily trading volume for SPY is approximately 60 million shares, while the average daily trading volume for VOO is around 3.5 million shares. This means that there are more shares of SPY changing hands on the stock exchange each day, indicating greater liquidity for the fund

For your average investor, liquidity is not a huge concern. Still, if you are an active trader, it could impact your ability to easily buy and sell securities without impacting the price, which brings me to my next point…

Bid-Ask Spread

The bid/ask spread is the difference between the highest price a buyer is willing to pay for a security (the bid price) and the lowest price a seller is willing to accept for the same security (the asking price).

The bid/ask spread represents the cost of trading security and is expressed in terms of “pips” (percentage in point) or “cents” for stocks and ETFs.

The main driver behind ask/spread is liquidity. Because VOO has less liquidity(trading volume), the price between what someone will buy/sell VOO is much wider compared to SPY.

The Bid/Ask is 20 basis points wide for VOO.
The Bid/Ask for SPY is 6 basis points wide.

Again, this does not mean much for the buy-and-hold investor and can largely be ignored. However, active investors should always consider the bid/ask spread when trading securities, as it can impact the overall cost of the trade. It is recommended to use limit orders when trading to help ensure that the trade is executed at a desired price, rather than paying the spread.

Dividend Yield

Both VOO and SPY are ETFs that track the S&P 500 index, which is comprised of 500 large-cap US companies. As such, they both offer dividend yields based on the dividends paid by the underlying companies in the index.

As of this writing, the dividend yield for VOO is approximately 1.36%, while the dividend yield for SPY is approximately 1.35%. This means that for every $10,000 invested in VOO or SPY, investors can expect to receive an annual dividend payment of approximately $136 or $135, respectively.

VOO Dividend Yield: 1.36%
SPY Dividend Yield: 1.35%

The slight difference in dividend yield between VOO and SPY is likely due to differences in the fund’s holdings, such as differences in the timing and amount of dividends paid by individual companies in the index. However, overall, the dividend yields for both funds are relatively low compared to some other asset classes, such as high-yield bonds or dividend-paying stocks.

It is important to note that dividends are not guaranteed and can be affected by various factors, such as changes in company earnings, economic conditions, and government policies. As such, investors should not solely rely on dividends for income and should consider other factors, such as capital appreciation and diversification, when making investment decisions.

Returns

10-year returns show VOO outperformed SPY by .08%.

Not surprising given the fact that VOO has a lower expense ratio.

Returns	VOO Vanguard S&P 500 ETF	SPY SPDR® S&P 500 ETF Trust
1-Month	-2.98%	-2.95%
3-Month	-3.88%	-3.81%
5-Year	+15.14%	+15.08%
10-Year	+14.55%	+14.47%

Source: TD Ameritrade as of March 27th, 2022

How Are They The Same?

While there are several differences between SPY and VOO, there are also some similarities.

Tracking

SPY and VOO seek to track the performance of the Standard & Poor‘s 500 Index, which measures the investment return of large-capitalization stocks.

Both ETFs seek to achieve their investment objective by holding a portfolio of the common stocks included in the index, with the weight of each stock in the Portfolio substantially corresponding to the weight of such stock in the index.

VOO and SPY are both designed to track returns, including dividends of the S&P 500, which is a composite of the 500 largest publicly traded companies by market capitalization. Both VOO and SPY Top 10 Holdings are the same companies with almost identical weighting with minor differences, likely due to tracking error.

SPY and VOO Top 10 Holdings

VOO	SPY
AAPL 6.9% MSFT 6.0% AMZN 3.6% GOOGL 2.2% GOOG 2.0% TSLA 1.9% NVDA 1.6% BRK.B 1.6% FB 1.3% UNH 1.2%	AAPL 6.9% MSFT 6.1% AMZN 3.6% GOOGL 2.2% GOOG 2.0% TSLA 1.9% NVDA 1.6% BRK.B 1.6% FB 1.3% UNH 1.2%

Other S&P 500 ETFs

While VOO and SPY are the most popular S&P 500 funds, a handful of other companies also have S&P 500 Tracking Funds.

All 4 ETFs seek to track the performance of the Standard & Poor‘s 500 Index, which measures the investment return of large-capitalization stocks, with very little difference.

The one outlier is SPLG. This index fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index, so you might see some discrepancies in returns and price compared to SPY and VOO.

Feature	SPY SPDR® S&P 500 ETF Trust	VOO Vanguard S&P 500 ETF	IVV iShares Core S&P 500 ETF	SPLG SPDR® Portfolio S&P 500 ETF
Expense Ratio	09%	.03%	.03%	.03%
Issuer	State Street Global Advisors	Vanguard	BlackRock	State Street Global Advisors
Average Market Cap	$207.1B	$207.4B	$207.1B	$207.2
Inception Date	01/22/1993	09/07/2010	05/15/2000	1/08/2005
Sales Load?	No-load	No-load	No-load	No-load

Source: TD Ameritrade

The Bottom Line

If you are a buy-and-hold investor, VOO is the better option.

If you want to become an investor, is critical to educate yourself about various investment options, and the benefits and drawbacks of each.

That said, VOO has a lower expense ratio, higher dividend yield, and slightly higher returns than SPY. But, if you are an active trader, specifically an options trader, SPY is the far superior option. The SPY ETF has far tighter bid/ask spreads in its ETF and underlying options market due to its much higher daily trading volume.

What’s The Difference Between a 403(b) and a 401(k)

September 26, 2023October 20, 2021 by Adam

Key Takeaways

403(b) and 401(k) both have the same contribution limits. Tax-deferred contributions up to $20,500 in 2022 ( A $1,000 limit increase from 2021)

403(b) plans are for public schools, universities, churches, and other 501(c)(3) exempt organizations

401(k) plans are commonly offered by for-profit companies and are subject to ERISA

403(b) plans tend to have higher fees and less diverse investment options.

What Is A 401(k)?

In 1978 Congress passed the Revenue Act, which included a provision to the internal revenue code – Section 401(k), that made it permissible for employees to defer taxes on investment contributions. However, it wasn’t until 1980 when benefits consultant Ted Hanna discovered the provision and created the first 401(k) plan at his employer Johnson Companies.

Fast forward to 2022, the 401(k) is the most ubiquitous type of employer-sponsored retirement plan, with assets totaling over $6 trillion.

401(k) Explained

A 401(k) is a qualified plan that allows an employee to elect to have a portion of their wages directed to their 401(k) plan on a tax-deferred basis. Commonly known as elective deferrals, contributions are not reported on an employee’s individual income tax return. They are not subject to federal tax withholding.

There are multiple types of 401(k) plans: a traditional 401(k) plan, SIMPLE 401(k) plan, Safe Harbor 401(k) plan, and Solo 401(k) plans.

Furthermore, many 401(k) plans allow employees to designate a portion of their elective deferrals as “Roth elective deferrals.” This means if you specify a portion of your contribution as a Roth contribution, the contributions are made on an after-tax basis but are not subject to taxation upon withdrawal.

What Is A 403(b)?

In 1961, 403(b) plans were made available to public education employers. Investment options were limited to annuities at first, and in 1974 mutual funds became an investment option.

403(b) Plan Explained

A 403(b), also known as a tax-sheltered annuity, is a retirement plan generally administered by public schools, colleges, universities, and qualifying 501(c)(3) plans. 403(b) plans allow its employees to designate a portion of their salary to their plan on a tax-deferred basis, and taxes are only paid upon distribution from the plan.

Similarities Between 401(k) and 403(b) Plans

Tax-Deferred Retirement Investments. Both 401(k) plans and 403(b) plan for contributions on a pre-tax basis and are only subject to income taxes when you start taking withdrawals.
Maximum Contribution. In 2022, the maximum contribution amount for both types of plans is $20,500. Over $26,000 if you are 50 or older.

In 2022, the maximum contribution limit for 403(b) and 401(k) plans increased to $20,500
Roth Contributions. Both 403(b) and 401(k) plans allow plan participants to make contributions on an after-tax basis. Commonly known as Roth elective deferrals, these contributions and earnings are not subject to taxes at distribution because the taxes were paid upfront.
Loan Provisions. You may borrow up to 50% of your vested balance, up to a maximum amount of $50,000. The loan must be repaid within 5 years unless the money is used to buy your main home.
Tax On Early Distributions. If you take a distribution before age 59 1/2, you may have to pay a 10% additional tax on the distribution.
Required Minimum Distributions. Both 401(k) and 403(b) and the majority of retirement accounts will require you to start taking withdraws if you reach age 70 1/2 before July 1st, 2019. However, as part of a provision of the SECURE act passed into law in 2019, if your 70th birthday is after July 1st, 2019, you do not have to start taking withdraws until age 72. You can withdraw more than the minimum amount, which will be included as taxable income.
Vesting. Employee salary deferrals are always 100% invested.

In other words, the money the employee contributed to either their 401(k) or 403(b) cannot be forfeited. So, when employees leave their place of employment, they are entitled to those contributions inclusive of any investment gains or losses.

Differences Between 401k and 403(B) Plans

Type of Employer. A 401(k) is usually offered by a for-profit company, like Apple or Google. Whereas 403(b) plans are offered by public schools, colleges, universities, churches, and some 501(c) tax-exempt organizations (think American Red Cross), and government employees.
403(b) plans are not subject to ERISA. ERISA stands for Employee Retirement Income Security Act. ERISA is a 1974 federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to protect individuals in these plans. In layman’s terms, if your employer-sponsored retirement plan is subject to ERISA, this means they are subject to more regulations and required to act in the employee’s best interest.
Investment Options. 403(b) plans only offer mutual funds and annuities. On the other hand, 401(k) plans may offer ETFs, Stocks, Bonds, Stock Funds, and mutual funds.
Employer Match. Sponsors of 403(b) plans are not prohibited from providing an employer match, although it is uncommon for 403(b) sponsors to provide employer matches.
Service Catch-Up Contributions. Suppose your employer includes the provision in their 403(b) plan that permits catch-up contributions. In that case, the limit of elective deferrals may be increased by $3,000 in any taxable year. The employee must have 15 years of service with the same employer, and there is a $ 15,000-lifetime cap. This provision does not exist in 401(k) plans.
Higher Fees. Because 403(b) plans are not subject to ERISA, they tend to have higher fees.
The fees include administrative costs and investment fees. It’s not uncommon for fees in these plans to range between 1% – 2.25%, whereas 401(k) fees usually do not exceed 1%.

New Legislation Related To 403(b) And 401(k) Plans

In 2019 Congress passed the SECURE Act [Setting Every Community Up for Retirement Enhancement].

Significant changes are as follows:

The minimum age for Required Minimum Distributions increased from 70 1/2 to 72 for those turning 70 after July 1st, 2019.

Individuals can withdraw up to $10,000 from 529 plans to repay student loans.

Making it easier for 401(k) plans to offer annuities in their investment options

Parents can withdraw $5,000 tax-free within a year of birth or adoption to pay for qualified expenses.

Which Plan Is Better?

Unfortunately, most employers either only offer a 403b or 401k, but not both. That said, 401(k) plans tend to have much lower fees in addition to a wider variety of investment options.

A 401(k) plan is better for most people.

However, since both plans generally have the same contribution limits, it is still advantageous for individuals with only a 403(b) plan to fully take advantage of the tax-deferred contributions.

Tax-deferred retirement plans are still one of the most sure-fire ways to succeed financially.