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Swell Investing IRA - Fees, ROTH Retirement Account and Performance


2019 Swell Investing IRA review: Roth IRA, SEP, Simple, traditional. Retirement account rating, cost, pros/cons, fees, and offers.



Swell Investing IRA Review


Swell Investing is an investment platform, formed in 2017 and backed by Pacific Life, that distinguishes itself from the plethora of competition by focusing on ethical investments.

Swell works by bundling and categorizing equities into six "impact mixes", giving the investor the option to choose in which type of sector they would like to invest as well as the percentage of each mix they would like to include in their overall portfolio. The mix options include Green Tech, Clean Water, Renewable Energy, Zero Waste, Healthy Living, Disease Eradication and Impact 400 (a combination of equities across all sectors).


Swell Investing


Swell Investing Account Types


Swell offer the basic types of investment accounts you would expect to see at an investment company:


Swell Investing Account Types


For those unfamiliar with these account types, the difference between each account is how, or rather when, it is taxed. A Flexible Swell brokerage account refers to the general investing platform that does not offer tax incentives on deposits such as that of retirement accounts. Swell Traditional IRA contributions may be tax deductible and offer tax deferred earnings, while similarly Swell SEP IRAs offer the same but to self-employed individuals. The Swell Roth IRA is a retirement investment vehicle that provides tax free earnings on after tax investments. It is primarily used by investors that anticipate being in a high-income tax bracket at retirement. 

Regardless of the account chosen by the investor, Swell provides the same portfolio options. Swell simplifies the investing process by providing the investor with the option to choose the type of sector in which they would like to invest. This process gives the investor a sense of choice over their investing strategy while not overloading them with information on the portfolios or research of each "mix". However, an itinerary of equities held and more information on the portfolio is available if the investor would like to learn more about each mix.


Swell Investing IRA Fees


Swell charges a 0.75% annual fee with a minimum value of $50. To give you a better sense of how that translates to a dollar value, for an investment of $500 Swell would charge you a fee of $3.75 per year.

There are no additional trading fees, price tiers or expense ratios. While this keeps it simple and easy to understand, it could be an expensive platform for investors with high net worth due to the lack of price tiers. To give you a better picture of how this would affect your portfolio, here is how price tiers are structured for a Charles Schwab Managed ETF Portfolios:

First $100,000: 0.90%
Next $400,000: 0.75%
Next $500,000: 0.65%
Over $1,000,000: 0.50%

As you can see, for investors with a portfolio of less than $100k, a Charles Schwab managed account would be more expensive than a managed account with Swell. However, investors with a portfolio of value greater than $500k would benefit from the price tiers at Charles Schwab – a savings of 0.1% for $500k to $999k or a savings of 0.25% for investors with a portfolio with more than $1,000,000.

Additionally, many other investment firms, such as Vanguard, also charge annual fees. Due to these fees, which are typically around $20 per year, an investor that is just starting to save would benefit from Swell’s percentage-based structure.


Performance


We experimented with Swell’s platform for two months to see how its performance compared to the overall market. Over the two-month period, our Swell mix grew by an incredible 16.02%, outperforming the S&P 500 by 5.79%. While this is very short period of time, it is quite impressive. These results arose during the market bounce back after a volatile dip in the market last year and were not typical results - do not expect to see growth like this this quickly in your account!


Swell Investing performamnce


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Pros


For ethically conscious investors, Swell successfully simplifies the process of investing in ethical stocks and allows the investor to choose the sector they would like to support. Swell has a fun and appealing brand that makes the process more enjoyable than the more conventional platforms.

The website design is sleek, intuitive and easy to navigate even if you are new to investing. Its use of visuals makes it easy to view your overall portfolio, adjust your mix and track growth.

Swell keeps investors informed by providing a brief and easy to comprehend market outlook on the user’s main page (when signed in). While not a comprehensive outline of all current events, it is sufficient in providing the most important takeaways for interested investors.

As per above, the mix that was tested during a two-month period performed above the S&P 500 by 5.79%. 


Swell Investing Portfolio


Cons


While Swell does successfully simplify the process, it does not consider your age, anticipated retirement age, income or tax bracket, or provide real investment advice. At sign up Swell asks the investor the reason for their investment, essentially establishing whether it is a short-term or long-term goal and recommends an account type based on this goal. While this is a clever tool, it only advises on a simplistic level.

Based on the types of equities which are held, which are mostly in high growth sectors with higher degrees of volatility, this type of platform may be better suited for younger investors that can afford to take risk. It does not fully explain the level of risk and first time or inexperienced investors may place themselves unknowingly into more risk than they are comfortable with. Due to this, a less experienced investor may benefit by seeking advice from a financial advisor before signing up, especially if this is their only retirement account. Perhaps Swell will figure out a way to develop a more comprehensive investment plan in the future. 

Unlike most other investment platforms, as of now, Swell does not have an app. While not essential, most online investing platforms offer this feature and it would be expected for to Swell release an app in the near future (especially if the target demographic is younger investors). 


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Swell Investing IRA - Conclusion


Swell could be a great option for younger investors that are beginning to save for retirement due to the risk involved, low minimum investment and no fees. Due to the fixed annual fee of 0.75%, Swell may struggle to retain high-net worth clients who would benefit from lower managed portfolios fees offered at other investment firms that offer tiered pricing plans.

The quality of the ideas behind Swell’s investments are subjective in nature, however there is a greater deal of risk in the types of equities they choose to invest in.

Its visually appealing layout and information driven platform makes a more enjoyable and interesting way to prepare for retirement.


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Swell Investing IRA Reviewed by Lawrence Goldstein. Rating: 4.5