One of my investment friend recommended this site to me and I must say it is very cool! Foliofn
is a company that essentially allows you to create your own mutual fund. You can buy partial stocks–so if you wanted to owe a share of Google, but not lay out the hundreds of dollars required you can spend just $25 and buy a fraction of Google stock. You can specify the weight of each stock in the fund–so for example if you wanted to leverage my tip from yesterday about small cap stock, you can find an index you like and then sort by cap and pick the a set number of stocks from that index–essentially creating your own small cap version of that index fund. And because there are no minimums you can pick and choose the stock in your folio. It is very cool!
This is very cool because it is like a your own hedge fund (although you can’t short stock). You can pick an investment you want to make, then you can diversify easily in that investment. Let’s say you want to invest in financial stocks (which are considering undervalued in this market because of the credit crunch), but you aren’t sure which one or ones you should buy. If you wanted to invest $1000 you could buy a bunch of different stocks for different companies (paying per each trade at your normal brokerage) or you could say invest my $1000 equally across these 6 different finance companies (or more if you please). And since they don’t charge per trade (just their monthly fee) you can change it up whenever you feel like it without penalty.
It is affordable (at $29 per month for unlimited trades–or $348 per year) providing that you are making at least that much money in interest. So if your folio owns 10% (so slightly better on average than the S&P which does about 7% after inflation) then you need to have at least $3480 to invest to break even. So while this is a cool tool and a neat way to try out investing you probably want to have at least $5,000, or be very good at beating the market 🙂
Right now they have a 2 month free trial; please leave a comment if you try this tool and like it.