Upon a review of JP Morgan Chase You Invest, the first thing I noticed is their catchy slogan, “Stay cool. Stay Calm. Stay Invested.”
Yikes. If you lived through the financial crisis, an investment bank telling you to stay invested is laughable. If I didn’t know any better, I’d say this smells like a ploy to lure naive investors into the market and ultimately leave them holding the bag. This sounds extreme, but keep in mind the US stock market has had one of the longest bull runs in history since global assets rebounded from financial collapse of 2008. Is it purely a coincidence that JP Morgan literally just released an investment app (targeted mostly at beginners who are unaware of stock valuations) just days after the S&P 500 hit an all-time high? Probably just a coincidence…
Let us never forget that prior to the financial crisis of 2008, JP Morgan employees systematically unloaded worthless CDOs and other exotic derivatives to innocent investors, to the tune of hundreds of billions of dollars, to save the massive investment bank’s bottom-line with zero regard for who they financially ruined in the process. The idea of attracting investors (who have never invested before, which JP Morgan executives openly stated is one of the primary goals of You Invest in this YouTube video) to “invest for free” and buy over-valued stocks is either a wild conspiracy theory or a legitimate cause for concern.
Is Chase You Invest For Real?
Time and time again, we have seen countless investment apps (Jellifin, Robinhood, etc.) advertise free trades, only to surprise investors with fees and monthly subscriptions. Robinhood seems to do a somewhat better job with offering actual free stock trades, even though trading strategies are limited and margin trading requires a monthly fee.
Unfortunately, Chase isn’t any different when it comes to “free” investing. For those that aren’t willing to put up the steep $75,000 average daily balance requirement for Chase Premier Checking or Chase Sapphire Checking, you’ll only receive 100 free trades as a one-time deal when you sign up – that’s it.
If you are a Chase Private Client, which means you have at least $250,000 with Chase, you’ll get unlimited free trades with You Invest.
The key take away here is that if you think you can trade for free for ever with Chase, unless you have a quarter of a million dollars on deposit, think again.
Why Free Online Brokers Suck
Self-directed online trading is a service provided by a brokerage company. That is how investing works. Because it is too expensive and impractical for one person to become a member of the major US stock exchanges, a large financial institution becomes a member, pays huge fees, and then makes their money back by charging lots of customers small fees.
There are two fundamental problems with “free” trading:
- Nothing is free in life
- Free trading is not sustainable
By offering trading for free, know that brokers are making up the difference somewhere in the business model. Wether they’re selling your orders to market makers and liquidity providers who front-run and rip you off for fractions of pennies at a time, or wether they don’t give you the best trading technology possible, just know that there is a price to free trades.
Chase does not offer any sort of advanced investing capabilities with their You Invest brokerage account. The only investments that users are permitted to perform are stock, bond, ETF, and mutual fund purchases.
There is no short selling, no covered calls, no iron condors. Basically there is no fun.
Chase You Invest Features and Fees
|Stock & ETF Trade||$2.95|
|Bonds and Fixed Income||$1.00|
Trades Are Not Free With Chase
When it comes to free trading, there is always a catch. With Chase You Invest, one of the catches is that you only get 100 free trades as a one-time deal, unless you have $75,000. And if you do have $75,000 with chase, you only get 100 free trades every year. To truly get unlimited free trades, you need to have $250,000 or more on deposit with Chase.
However, even then, you’ll only get free stock and ETF trades. You won’t get any options, futures, or bond trades for free. Moreover, advanced trading strategies, like short selling, which allow traders to profit when prices go down, are not supported by Chase You Invest.
Popular Alternatives to Chase You Invest
TD Ameritrade offers free trades… Ally Invest offers free trades… E*Trade offers free trades… Chase is not the first broker to offer only 100 free trades.
I would so much rather spend $1 to $4 to trade a stock and get access to amazing trading tools and research than opt for the cheap route and select a broker with limited tools and capabilities and make a terrible investment as a result.
These are three very popular online brokers in 2018 for active traders.
$5 per stock
$1 per option
$0 to close
$4.95 per stock
$4.95 + $0.65 per option
$5 per stock
$1.00 per option
Overall, we think die-hard Robinhood traders (those who are already used to free stock trades) are unlikely to switch over to Chase You Invest, and for good reason. Chase doesn’t offer much of a compelling argument to switch from Robinhood, or any other discount online broker for that matter.
If you’re a serious or professional trader, you’ll need the advanced trading platforms and trading capabilities that real online brokers, like Ameritrade, Ally Invest, TradeStation, and others offer. These brokers allow margin trading, futures trading, options trading, and provide free charting and research platforms with real-time level 2 data.
On a broader note, it is awfully odd to us that Chase is very clearly attempting to get people who have never invested before to invest on their platform (by enticing them with free trades) at all-time high stock market prices. Stocks have never been more expensive in history, and Chase is basically saying, “hey unsophisticated investors, come invest with us for free and remember to stay cool, calm, and collected and never panic when prices go down.”
Remember, unless you have $250,000 to deposit with chase, you’ll have to pay $2.95 per trade after you run out of the limited 100 free trades. If you don’t plan on trading frequently, and want to buy stock and forget about it, Chase You Invest might do the trick, but we still don’t see a strong reason to use Chase over any other online broker.
In the real world, stock prices move up and down, and to be limited to only purchasing stocks, and to have no ability protect your portfolio with put options, generate income by selling covered calls, or bet against the market by shorting stocks, and only receive 100 free trades is unequivocally not a good deal.
Bottom line: by using any one of the valuable promotions offered by the top stock brokers in 2018, you can get more value than Chase’s 100 free trades with You Invest.