iBillionaire Review 2017
iBillionaire is a Web and iPhone based investing platform. Yes, it is only available on Apple devices. It's built around the concept of replicating the same investments made by the 1% as well as professional money managers like Ray Dalio and Warren Buffet. Overall I've found the app to fall flat on lofty goals and promises. In a category with peers such as M1 Finance and Robinhood, apps have little room to perform "mediocre".
We're going to dig into a full review of the iBillionaire app with all the good, bad, and ugly.
Fees and Commissions
iBillionaire comes right out of the gate charging a similar fee structure to apps like Acorns. The flat $1 monthly fee is pretty standard for small accounts these days. As always I want to point out that while $1 seems small, on an account of $50 it represents a 24% annual fee which is the equivalent of payday loan charges in the investing world. Even the greediest funds lose investors when the start to charge much more than 1% in today's low-fee environment.
Once you pass $3,000 in your account your annual fee will become a hefty 0.65%. Why do I say hefty? Because that charge is on top of fund fees and expenses. If iBillionaire charges you 0.65% and the fund they buy for you charges 1.2% then you're looking at 1.85% total. For reference, similar apps such as M1 Finance is free up to $1,000 and then 0.25% after that.
Let's break down the fees with our standard chart of annualized expenses What will you pay to use the app each year?
Annual Cost of iBillionaire
Remember, the red line is the cost of using iBillionaire, it does not represent the total cost which would take into account the fees and expenses of whatever funds you buy. The blue line is the cost of iBillionaire (either flat fee of $1 or 0.65%) plus the fee of (SDY) which is the fund that iBillionaire's "Dividend Aristocrats" investment uses (0.35%).
More About Fees
If you're already confused about the fees associated with iBillionaire let me make it simpler.
There are two fees.
- The fee for using iBillionaire
- The fees that any investments may charge
In some of the iBillionaire "savings plans" there are no fees for #2. One example is the "Tech Plan" which simply holds shares of Amazon, Facebook, Apple, and Google stock. Since individual stocks don't have expense ratios, there's no #2 fee in this particular case.
Let's be clear. Almost every brokerage or robo-advisor adds an extra layer of fees. Commissions, monthly fees, or percentage of assets under management are all fee structures. The reason I'm highlighting them here is that the iBillionaire "savings plans" don't really make this double layer apparent at first and I don't want you all being taken by surprise.
Available Promotions & Free Cash
As always we try to hook you up when there's free cash to be had. Luckily iBillionaire is handing out fivers ($5) for signing up as long as you use our link below. We'll get $5 and it costs you nothing so consider this your way of saying, "Thanks for writing this great article!".
Referral Code: RJj04HRf
Account Minimums & Maximums
You'll be able to get started with as little as $5 per month. To the best of my knowledge, there is no way to avoid the monthly subscription, however. It seems that the minimum monthly contribution is $10. Of course, this helps to take advantage of automated savings and dollar cost averaging. Both of which are great investing and savings features that are pretty standard in most modern investors' world.
Practically speaking, you'll need about $15 - $20 to invest your first month. At $10 per month over 12 months, you'll end up paying a hefty 10% fee your first year so watch out.
There are no account maximums and accounts are SIPC protected so larger portfolios should be no problem.
As always, we love fractional share trading in any investment app. It's a great feature that allows investors with smaller amounts of money (like me!) to split their dollars up across more investments.
Fortunately, iBillionaire does allow fractional trading. Of course, they have to in order to allow investors to contribute as little as $10 at a time! There are very few investments out there that you can buy outright for $10.
Even though fractional trading is nice with iBillionaire, it has a major drawback. You're limited to investing in just 7 pre-made "savings plans". So don't be fooled into thinking that you'll be able to buy fractional shares of individual stocks or ETFs - you won't!
If you want the full power of fractional trading with no fees on accounts under $1,000 then you'll need to use my favorite app, M1 Finance.
iBillionaire has some quirky things going on. Some of them I find marginal value in. Some of them I find to be utterly useless. Let's examine a few.
iBillionaire Android App
There is an iBillionaire Android app called, "iBillionaire: Investment Ideas". Unfortunately, it is NOT the real iBillionaire app though it is made and maintained by the parent company. I found it to be confusing and misleading with no clear indication that it is not actually a functioning app.
Attempting to log in does nothing and the interface is cluttered at best. It's simply a CNBC type investing news app. I am really not happy with this scammy feeling app.
It's an unforgivable offense in today's world of investing apps to fail to have a viable app on all platforms. There are many great apps out there for Apple and Android platforms so that's a huge negative mark against iBillionaire.
I'm actually really surprised they can get away with advertising investment products with this name. In the same regulatory environment where it's illegal to call variable annuity sub-accounts "mutual funds", there has to be a prohibition on calling ETFs and stocks "savings plans". I'll honestly be surprised if they don't get a FINRA or SEC infraction for that.
Basically, their savings plans are the way that you can invest with iBillionaire. There are only 7 of them and they lack any creativity whatsoever with the sole exception of the "All Weather" plan.
For instance, the "Elon Musk & Tesla" savings plan allocates 100% of your investment to shares of Tesla (TSLA). Not only am I unhappy that they're charging huge fees, they're also charging these fees to unimaginatively invest your assets in single stock positions. What? How does this make sense?
If investment advisors can be fined for calling subaccounts "mutual funds", then it should be outright criminal to call your investment vehicles "savings plans" and then allocate 100% to a single stock. While this is an app, after all, it is also a registered investment adviser with the SEC.
Tracking the Rich and Famous
One place where iBillionaire excels (arguably the only place) is in reporting the movements of fund managers and insanely rich people. Even this may be of limited value, however. Most investors will be better off in the long run by simply taking a more passive indexing strategy than trying to jump in and out of positions with the wealthy.
We also need to remember that these fund managers usually are buying and selling at minimum $100 million to $1 billion or more at a time. Because of this, they're often taking positions that you and I SHOULD NOT BE TAKING.
Allow me to illustrate one extremely simple example of why you may not want to chase other investors simply because they have more money than you:
With $100 million you can make a cool $250,000 on a 0.25% price movement. If I followed an investor into that trade and made the exact same return on my $5,000 I'd have made $12.50. Unfortunately that $12.5 is less than the $16 in commissions I paid to buy and sell my position. Meanwhile, the $100 million investor is laughing at me with his $249,984 profit after commissions.
iPhone users who are extremely interested in what Ray Dalio is eating for lunch. Seriously though, this app is best suited for tracking what fund managers are buying and selling. Android users can also use the Android version of the app for the same feature but there's no buying or selling capability.
I honestly cannot say that I would recommend anyone use this app to save money or invest. Steer clear.
Pros & Cons
- Tracking fund managers
- Bad investment options
- High fees compared to peers
- No full-featured Android app
- Lack of transparency
- Only 7 "savings plans"
Overall I'm less than impressed. iBillionaire aims to hit the robo-advisor mark with pre-made investment baskets but falls short. Instead we get "savings plans" with single stock allocations. Why would I pay iBillionaire to manage a single stock when I can easily do it myself with a free app like Robinhood or M1 Finance?
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It's unforgivable to lack a functional Android app in today's investing app market. No investing app should launch without full multi-platform support in my opinion.
If you decide to use iBillionaire make sure to consider all the potential benefits and drawbacks of the platform. I'd love to hear your thoughts and experiences in the comments below!