Online do-it-yourselfers can now purchase prepackaged portfolios and baskets of securities that are geared for their unique needs. Both beginning and advanced investors can easily understand the portfolio investment programs, which tend to be a low-cost way for you to own hundreds of stocks. The primary difference between prebuilt portfolios and mutual funds is that with prebuilt portfolios, you know exactly what you own because you’re the manager.

In other words, there’s no lag time between purchasing the shares and receiving the information from the fund managers. If you’re an advanced investor with unique investing needs, prepackaged portfolios can be more desirable to you than a mutual fund because you can custom tailor the prepackaged portfolio to meet your particular requirements. For new investors, a prepackaged portfolio can be a way to control a number of individual shares and avoid errors of investing in just a few individual stocks.

Here are two sites that offer prebuilt portfolios:

• FOLIOfn.com offers more than 120 prebuilt portfolios. Each prebuilt portfolio averages 50 securities; 2,500 stocks are available. Additionally, trades are free with some limitations. For example, trades are executed twice a day at the market price. You can rebalance a prebuilt portfolio at no charge, but individual trades cost $14.95. If you’re not sure where to start, use the FOLIO Wizard to identify your investor profile and which Ready-to-Go Folio might be right for you. FOLIOfn.com hasn’t set a minimum investment requirement. There are three folio plans. The 1-Folio Plan includes up to 200 commission-free trades every month, 50 (1 folio of up to 50 securities), one-click diversification, and automatic rebalancing for $19.95 per month or $199 per year. The 2-Folio Plan includes up to 400 commission-free trades every month, 100 (2 folios of up to 50 securities each) one-click diversification, and automatic rebalancing for $29.95 per month or $299 per year. The 3-Folio Plan includes up to 600 commission-free trades every month, 150 (3 folios of up to 50 securities each) one-click diversification, and automatic rebalancing for $39.95 per month or $399 per year. You pay an annual $25 IRA fee. You can also take advantage of a free 30-day trial. FOLIOfn.com has partnered with Reuters to offer members a way to purchase portfolio derived from the Reuters Select screens. After you subscribe to FOLIOfn.com, add the Reuters Select Folio service for an additional $99 per year to get started. You can select eight Reuters Select Folios, including Consensus Choices, Favorite Value Plays, and Growth.
• Merrill Lynch HOLDRs — Holding Company Depositary Receipts — are baskets of securities that can be broken into their component stocks. You buy HOLDRS just like a stock. With each HOLDR, you get ownership in 20 or more stocks, but you pay only a single commission. And the annual fees on HOLDRS are inexpensive — only eight cents per HOLDR. Assuming that you bought 100 shares of a HOLDR with a market price of $100, the annual fee on your $10,000 investment would be $8 (or 0.08, expressed as a percentage). And it can get even better: The annual fee is waived to the extent that dividends and cash distributions on the underlying stocks are not enough to cover the fee. To cancel your HOLDRs, just instruct your broker to deliver your HOLDRs to the HOLDRs trustee and pay a cancellation fee of $10 per round-lot of 100 HOLDRs. This converts your HOLDRs to individual stocks. Canceling your HOLDRs isn’t a capital gains event, so you don’t have to pay taxes. Overall, HOLDRs allow you to diversify your investments and give you personal control of your investments. HOLDRs offer you tax benefits, liquidity, and flexibility — and no management fee. However, you do pay a small annual custody fee that’s taken against dividends and distributions when HOLDRs are issued.