Axos Invest Review 2021 – A Free Robo Advisor Investment Service

Axos Invest Review 2021
Axos Invest Review 2021

Axos Invest is a low-cost financial advisor that offers a new approach to investing. But is it any good? We dive into the specifics of this robo investing service.

  • Commissions & Fees – 9.5
  • Customer Service – 7.5
  • Ease of Use – 7
  • Tools & Resources – 6.5
  • Investment Options – 7.5
  • Asset Allocation – 8

Axos Invest is the cheapest robo investing service on the market. There’s no annual fee for taxable accounts, and you can get started with as little as $1. Overall, it’s a decent platform, even though its portfolios can be simplistic.

The idea for Axos Invest was born after the founders, Herbert Moore and Vicki Zhou, saw too many companies out there trying to “appify” investing.

They witnessed the often-misaligned values of financial advisors and their clients, combined with too-high minimum investment amounts and unreasonable fees firsthand. So Moore and Zhou wanted to create something better.

What Is Axos Invest?

“Automation and simplification are important,” says Simon Lee, a finance specialist for Axos Invest. “We also offer a personalized touch by pairing each of our clients with a personal finance expert. On top of this, we don’t have a required minimum portfolio balance, allowing investors of all levels to start investing for their future sooner. Essentially, we removed all the annoying parts of investing and improved upon the good stuff.”

From what I’ve seen so far, Axos Invest sounds like a version of Betterment except without the fees for taxable accounts (you’ll need to pay a premium for investing in an IRA). They take your money and invest it to buy a portfolio of ETFs while managing the dividends and rebalancing according to your choices.

Axos Invest is SIPC insured and registered with the financial regulatory agencies SEC and FINRA. Your investments are not FDIC insured. They use Apex Clearing Corp. as their cleaning firm, and your investments are held with them. To start an account with them, they have a $10 minimum. They do not charge an annual fee for their basic service, but you will get charged annual fees for the ETFs they recommend.

The service does support fractional shares, so that means all money deposited is invested. Your deposited money will be put to use, and no cash balance will remain.

Axos Invest Features

Minimum Investment$1
FeesNone — Basic services are free
  • Tax Protection (New) — Axos Invest has grouped several features — including IRAs, WiseHarvesting, and Selective Trading — into a premium package designed to help protect your returns from taxes. The monthly cost is 0.02% of your average account value and is capped at $20 a month.
  • Fully Automated Platform — All investment selections, rebalancing opportunities, and trades are identified and performed via the fully automated service.
  • Two-Factor Authentication — A verification code will be sent to your mobile phone when you want to make an update or access your personal information. To enable two-step verification, go to the “Security Information” tab under the profile settings.
  • Milestones — Similar to Betterment‘s goal setting, though more restrictive. Set up the financial achievements you want, and Axos Invest will monitor, rebalance, and automate your deposits. You can choose among these goals: Rainy Day, Retirement, Custom, and Build Wealth.

How to Create an Account With Axos Invest

The process is relatively straightforward, and you’ll be prompted to answer several investing-related questions to determine your risk tolerance and financial goals. It’s important to answer these questions honestly so Axos Invest can correctly assign you a risk score from 1-10 — with 1 being the lowest risk tolerance and ten being the highest.

Don’t worry, though. You can always adjust your risk score — and any other financial choices — later on, once you’ve opened your new account. Based on your risk score, Axos Invest will automatically invest your money into a diversified portfolio.

Portfolio

Axos Invest surprising uses a bunch of Charles Schwab ETFs in their portfolio makeup. Unfortunately, the bond portion of their portfolio is heavy into corporate bonds, which compared to other types of bonds, is more sensitive to inflation and rate hikes from the Federal Reserve. On the positive side, Axos Invest does have a REIT ETF to invest into real estate that historically does not correlate to stocks or bonds.

Stocks

SectorETFTicker
USSchwab U S Broad MarketSCHB
ForeignSchwab International EquitySCHF
Emerging MarketiShares Core Emerging MarketIEMG

Bonds

SectorETFTicker
US TIPSiShares TIPS BondTIP
CorporateiShares Corporate BondLQD
Short-Term CorporateVanguard Short Term Corporate BondVCSH
Short-Term High YieldSPDR® Bloomberg Barclays High Yield BondSJNK
Short-Term High YieldPIMCO 0-5 Year High Yield Corp BdHYS
US Short-TermVanguard Interm-Term Govt BdVGIT

Alternatives

SectorETFTicker
Real EstateiShares US Real EstateIYR

Once your risk score is calculated — and you’ve selected the type of account you want to open — you’ll be asked for your bank information. The minimum investment amount is only $10, with the opportunity to set up automatic contributions. Then Axos Invest’s service goes to work for you.

Once your new account has been funded (which takes about two weeks), the software will create a diversified portfolio based on your previous answers to their questions.

Axos Invest Pros & Cons

Axos Invest Pros

  • No Annual Fee – Axos Invest is free to use with no hidden charges, though the ETFs they recommend you invest in do charge annual fees, and you’ll have to pay a premium if you want to invest in an IRA.
  • Fractional Shares – All money deposited is used in the allocation they recommend.
  • Low Initial Deposit – $1 is all that’s needed to open an account.
  • Automatic Rebalancing – When your account varies from the specified asset allocation, Axos Invest will automatically adjust your portfolio
  • Cash Position – Axos Invest is the only robo advisor that allocates cash as part of your asset allocation.

Axos Invest Cons

  • Same Portfolio for Every Goal – Axos Invest appears to create a portfolio based only upon your time horizon and risk profile. The asset allocation and, more importantly, funds used will be the same in a taxable or tax-deferred account.
  • No Muni Bonds – For high-income individuals, Axos Invest does not offer municipal bonds to lower your taxes.
  • IRAs No Longer Free – You will now have to pay for a premium package if you wish to invest in an IRA.

Axos Invest Review Summary

Axos Invest is free to use if you are not looking for an IRA and requires only $10 to get started. If you are just starting to invest, they might be an option to consider.

However, if you want to invest in an IRA, be aware that this is now part of Axos Invest’s premium Tax Protection package.

Axos Invest’s recently introduced tax-loss harvesting and makes it more competitive to other robo advisors.

Ultimately, we feel Axos Invest isn’t a bad service, but there are other robo advisor options available by more established players.