Do you have an extra $50 to spare? That’s all you need to get started with Swell Investing. But that’s not all, you’ll also be participating in socially responsible investing. Everything you need to know about Swell Investing is in our review.
Table of Contents
If you’ve been looking to invest your money in a way that’s consistent with your personal values, Swell Investing is an investment platform you need to check out. They offer seven different investment options, each focusing on a specific aspect of socially responsible investing. You can get started for as little as $50, which will give you an opportunity to begin having a financial impact on both the way companies are run, and the types of businesses they engage in.
Right now, Swell is giving Dough Roller readers $50 when they open an account. So, you invest $50 and Swell will match your $50–that’s $100, and a swell way, to begin investing in a bright future for both you and the rest of the world.
Founded in 2015, and based in Santa Monica, California, Swell Investing is a subsidiary of Pacific Life Insurance Company. It’s a robo-advisor that focuses on socially responsible investing (SRI). This includes companies that are engaged in enterprises that support clean energy, healthy living, and social equality.
Each company must be aligned with at least one of the 17 United Nations Sustainable Development Goals.
The basic Swell Investing taxable account is the Flexible Brokerage Account. Unlike retirement accounts, investment income earned in this account is fully taxable, whether from dividends or capital gains. However, funds can be withdrawn at any time without tax considerations or an early withdrawal penalty.
Your portfolio is comprised of stocks and American Depositary Receipts (ADRs). ADRs represent stocks that trade in the U.S., but are actually from a foreign corporation. They’re are cost effective way to buy shares in a foreign company.
And whether you open a Flexible Brokerage Account or an IRA, you can have multiple accounts.
In total, Swell Investing offers seven different investment portfolios, each focusing on a specific broad area of SRI investing. We’ll cover each of the portfolios under the “Swell Investing Investment Methodology” section further down.
Choosing your portfolio mix: Once your account has been set up, you’ll be asked to create your own portfolio mix. You’ll decide how much to invest in each of the funds offered by Swell Investing. Even once your portfolio has been created, you’ll have the ability to change the percentage you allocate to each of the portfolios offered. You can do this through either the “Edit Mix” or “Manage Mix” dropdowns.
Rebalancing: Your portfolio will be rebalanced at least semi-annually. However, rebalancing will take place more frequently if it is deemed necessary to maintain target allocations, or if the integrity of the underlying portfolio’s social cause is determined to be compromised.
Automatic dividend revinesting: Dividends paid by stocks held in your portfolio will be held in your cash account until they reach $1. Once they do, they will automatically be reinvested into your portfolio.
Portfolio customization: Each Swell Investing portfolio you invest in contains a mix of investment securities. But as an investor, you will have the option to remove up to three holdings from your portfolio. That means you can remove companies you consider to be objectionable or not consistent with your investment goals. No additional fees are charged for this action.
Minimum initial investment: $50
Account types offered: Individual taxable accounts (joint accounts are not currently supported), and traditional, Roth and SEP IRAs
Account access: Web only, not available for mobile devices
Account custodian: Your Swell Investing account is held with Folio Client, which acts as both the account custodian and clearing agent. Folio Client is a member of both SIPC and FINRA.
Customer service: You can contact Swell Invest by both phone and email, during regular business hours.
Swell Investing security: Your funds invested with Swell Investing are covered by SIPC, which insures your account against broker failure for up to $500,000 in cash and securities, including up to $250,000 in cash.
The company also uses bank level security measures to protect your information. This includes use of browser encryption, secure servers, an identity verification services.
Swell Referral Program: You can earn a bonus of $300 for every three friends who sign up and fund an account through your custom link. Each friend must remain invested for at least 90 days before the bonus will be paid. You can refer up to 18 people, which means you can receive as many as six bonuses, for a total of $1,800.
Swell Investing is a robo-advisor, which means not only does it create a portfolio for you, but it also manages it on an ongoing basis. This includes both periodic rebalancing to maintain target allocations, as well as reinvestment of dividends.
As noted earlier, companies are chosen based on their emphasis on the 17 elements of SRI laid out by the United Nations. Swell Investing portfolios are each constructed at a moderately aggressive risk level. They also aim for a maximum 4% weight per company in any portfolio.
The seven portfolios offered are as follows:
Zero Waste: This fund is dedicated to companies that provide solutions around composting, recycling, waste minimization, and new materials for everyday products. That includes recycling plants, repurposing companies, and waste treatment facilities. The portfolio is comprised of 36 companies, all deemed to qualify for this purpose, but most are not household names.
Clean Water: This fund invests in companies that provide water filters, water pipe repairs, and water treatment facilities. The fund holds a total of 49 companies.
Renewable Energy: This fund is invested in companies that produce solar panels, wind turbines, and lithium batteries. The fund has a total of 56 holdings.
Disease Eradication: This fund invests in pharmaceutical and biotech companies conducting research and development, and developing new approaches to dealing with the world’s biggest health challenges. It also invests in medical device manufacturers. The fund holds a total of 58 companies. Some are well known, such as Bristol Myers Squibb, Biogen Becton Dickinson & Co., Merck and Eli Lilly.
Healthy Living: This fund invests in fitness companies, organic food distributors, and innovating home care providers. It invests in 56 companies, including Unilever, Fitbit, NutriSystem, Planet Fitness, and MediFast.
Green Tech: This fund focuses on energy efficiency, desirable building products, and efforts to reduce the pull on energy infrastructure. More specifically, companies are engaged in the production of electric vehicles, lithium mining, and energy efficiency solutions. There are 59 companies in this portfolio, including Tesla, Johnson Controls, Eaton Corporation, Owens Corning, Mitsubishi Electric, and Nvidia.
Impact 400: This is a more general fund for those who are looking for a more broad SRI portfolio. It currently contains stock in 398 companies, including many of the companies that are a part of the six more specialized funds above.
Each portfolio also includes a very small amount in cash, generally 0.25% of the portfolio. This amount is used to pay for Swell Investing advisory fees. It is held in liquid form to avoid the need to sell stocks to pay the fee.
Read More: How To Start Investing With Little Money
Like most robo-advisors, Swell Investing uses a simple flat pricing model. They charge 0.75% for their annual management fee. That means you can have a $10,000 portfolio managed for just $37.50 per year, or $100,000 for $375.
There are no trading fees, no expense ratios, and no complicated price tiers (higher fees for lower account balances).
Now it’s worth noting that Swell Investing’s annual fee is higher than the typical robo-adviser range of 0.25% to 0.50%. However, Swell Investing offers highly specialized portfolios, even by socially responsible investing standards.
To open an account with Swell Investing, you’ll need to be at least 18 years old, and a U.S. citizen.
You’ll need to provide the following information:
- Your name
- Email address
- Social Security number
- Date of birth
- Citizenship/residency status
- Employment status
You may also be asked questions about your current investment assets, as well as your risk tolerance and investment time horizon.
From the time you complete the application process until your account is activated and fully invested, it can take between four and eight business days.
For funding purposes, you may be able to link your bank account. Swell Investing can link with more than 1,500 banks and community credit unions. If your financial institution is one of them, your bank account will be verified using two random micro deposits. Once the link is established, you’ll be able to transfer funds back and forth between your bank and you’re Swell Investing account.
If you choose, you can also opt to add recurring deposits. However, at present, the platform does not accept transfers from non-U.S. based financial institutions. And unfortunately, there is currently no capability to fund an IRA account through payroll deposits. Bank transfers are the only way to fund a Swell Investing account.
Much like Swell Investing, Earthfolio is another robo-advisor dedicated to socially responsible investing. It charges a lower annual fee at 0.50%, but requires a steep minimum initial investment of $25,000.
If you’re looking for a robo-advisor with lower management fees, two popular options are Betterment and Wealthfront. Each charges an annual fee of 0.25%, and also offers a socially responsible investing option.
Still another robo-advisor well known for socially responsible investing is Wealthsimple. Their annual management fee is 0.50% for portfolios up to $100,000, then 0.40% for portfolios above.
Related: How to Stat Investing?
- Dedicated SRI robo-advisor: While some robo-advisors offer a socially responsible investment option, Swell Investing is strictly about SRI. It provides you an opportunity to invest in what you believe in.
- Great for new and small investors: You can invest with a minimum of $50. This is well below the minimum threshold charged by the majority of SRI dedicated robo-adviser platforms.
- Staying power: Swell Investing is a subsidiary of Pacific Life, giving it more staying power than many standalone robo-advisors.
- Earn bonuses: The Swell Referral Program gives you an opportunity to earn up to $1,800 in bonuses by referring friends to the service.
- High annual fee: The annual management fee of 0.75% is higher than the typical robo-advisor range of between 0.25% and 0.50%.
- No joint taxable accounts: No capability to open a joint taxable account.
- No margin accounts: No margin capability is offered.
- Account funding can only be done by bank deposit: There is no capability to fund an IRA account through payroll deposits.
- No mobile support: Not available for mobile devices.
Question: Why should I choose to invest in a robo-advisor that specializes in socially responsible investing?
Answer: Many of us would prefer a world that’s more environmentally balanced, offers greater equality across races and genders, offers better working conditions and provides sustainable economic activity. But one of the best ways to make this happen is by investing your money in companies that work toward these objectives. This can be even more effective at bringing about positive change than political or legal action.
Question: Why doesn’t Swell Investing accept joint taxable accounts?
Answer: At the moment they’re keeping the platform as simple as possible. But they do promise they’re working on expanding available accounts, including eventually extending it to joint taxable accounts.
Question: I’m not sure about the investment performance of dedicated socially responsible investing. How can I find out about the investment results of Swell Investing’s portfolios before I invest?
Answer: Swell Investing is one of the few robo-advisors that regularly publishes the performance of each of its portfolios on its website. You can find the performance of each of the seven funds on Swell’s Performance page. It includes the performance of each since inception.
Socially responsible investment options have been on the rise for the past few years. There are many different investment platforms that have thrown their hats into the ring, offering an SRI option. But relatively few are fully dedicated to SRI as an investment methodology.
Swell Investing offers an opportunity to fully immerse in SRI investing, which means you can finally begin to invest in a way that’s consistent with your beliefs. You can do it with as little as $50, and invest in either a regular taxable account, or a retirement account.
If you’d like more information, or you’d like to invest with the service, visit the Swell Investing website.Topics: Investing • Reviews