For many people, especially young adults, the idea of trading stocks and investing can be intimidating. You probably know or have been told that it’s never too early to start saving for retirement, and one of the most common ways to do so is by investing your money. But where do you start?
Since there’s an app for almost everything now, it’s not really surprising that someone came up with the idea for investment apps that target millennials and first-time investors. These products promise to make the process smooth, simple, and pain-free by utilizing a platform very familiar to the under-30 crowd.
But how do these apps work, and can they actually help you to put away some savings?
Investment Apps for Beginners
Below are five apps aimed at giving millenials and investment newbies a pleasant investing experience. We’ll explain how each one works and offer a verdict on whether or not it’s worth a download.
1. Best For Commission-Free Trading
We all know the story of Robin Hood—you know, the guy who stole from the rich to give to the poor? Well, this app aims to spread the wealth around by making investing more accessible and as cheap as possible.
With Robinhood, stock trades have zero commission—that’s right, they’re completely free, and so is the app itself. All users have to do is download the app and connect to their bank accounts. For a fee, an upgrade to Robinhood Gold allows access to extended trading hours and margin accounts.
Sound too good to be true?
That would depend on your expectations. If you expect to become a millennial Warren Buffet using this app, you’re likely headed for disappointment.
Some cons pointed out by more experienced investors include delayed quotes and a lack of available research, as well as the fact that mutual funds and bonds are not supported here. The lack of resources also runs the risk of making this a risky phone game for new investors, rather than an educational experience.
The Bottom Line: Don’t expect to strike gold with this app. If you have any experience with trading stocks or investing, you will likely be unimpressed by the options (or lack thereof) available here. Still, there’s no denying this app’s simplicity and ease of use (not to mention that trading is completely free). So, if you’re new to investing and want to get your feet wet, Robinhood might be a good option for you.
2. Best For Spare Change Investing
Acorns was designed for those of us who don’t want to spend much time or thought on investments. With this app, users can invest “automatically” based on how often they whip out a debit or credit card.
All you have to do to get started is link a card to the app and for each transaction you make, Acorns will round up the amount to the nearest dollar (or whatever amount you choose) and invest the change once your total hits $5.
Where is that money invested, you might ask? Into one of five pre-set portfolios, ranging from “conservative” to “aggressive.” After selecting a portfolio type, users can browse the ETFs (Exchange Traded Funds) to invest in. With Acorn, there are seven options offered through Vanguard and iShares.
Unlike Robinhood, there is a fee for using Acorns. Users will be charged $1/month until they have invested $1 million. If you actually make it that far, the fee becomes 0.25% per year.
The $1/month fee for getting started makes sense if you make frequent purchases with your debit or credit cards. However, if you only make one or two purchases with a card, and your “change” amounts to less than $5, your money won’t be invested and you might actually lose to fees.
The Bottom Line: Investment options are limited with this app, but it was designed to minimize the time users spend thinking about stocks anyway. While in the long-run you likely won’t be able to retire with this app alone, its ease of use and relatively low risk make it a great option for first-time investors looking to give an added boost to their savings without much effort.
3. Best For Investment Education
Stash caters to investors who want to try for a little more independence. For just $1/month for accounts with less than $5,000, Stash attempts to help users make informed investing decisions with the help of educational resources.
After answering a few questions to determine risk tolerance, users will be presented with their investment options, which are explained pretty simply. In addition, users can choose “themes” based on beliefs, interests, or favorite companies. Examples of categories include “Big Business Bonds,” “All That Glitters,” “Bonding with America,” or “Aggressive Mix.”
Stash also has a “Diversify Me” feature that further simplifies the experience by automatically creating customized portfolios for each user.
This takes confusing and intimidating lingo out of the equation so investors can feel more confident building their portfolios.
Unlike some other options on this list, Stash does offer a retirement feature. Stash Retire costs $2/month on up to $10,000 and offers IRAs with the same investment choices described above.
The Bottom Line: As with Acorns, you’ll want to make sure that the fee will be worth it for you. If your portfolio is small, $1/month could actually add up to a pretty high percentage in fees. However, Stash represents a decent learning experience for investment newbies by offering a good balance of guidance and freedom.
4. Best For Long-Term Saving
Wealthfront is aimed at helping users save long-term without worrying too much about their portfolio details. This can be particularly valuable to anyone who has to think about creating their own retirement fund without access to an employer 401(k).
Once you link your bank accounts, the app will analyze your spending patterns and financial habits. After answering questions about your goals, Wealthfront will generate a strategy customized for your needs. You can then choose up to 11 ETFs to have Wealthfront invest your money in. Automatic rebalances will also take place based on changes in the market.
There is a required $500 minimum account balance to join Wealthfront, but using the app is free for the first $10,000 that you invest. (After you surpass $10,000, the rate becomes 0.25% per year—a relatively competitive rate.)
The Bottom Line: As an automated advising service, Wealthfront offers competitive rates and services that are ideal for anyone who is still new to investing but wants to save for the future. Their app is easy to use and comes with a number of tools to help users plan and save. Compared to the other apps on this list, Wealthfront offers the most diversity, while also providing the right balance of freedom and automation.
5. Best Traditional Broker
While its trade commission isn’t the cheapest ($6.95 per trade), TD Ameritrade requires no minimum investment and offers extensive research and data for free. You might consider this option the more “grown-up” app on this list. But don’t worry—with portfolio-building guidance, even beginners can go forth with confidence.
The app comes with over 20 informative videos that provide advice on investment strategies, stocks, and ETFs.
Despite these features, the TD Ameritrade app might still scare off novice investors, seeing as it resembles the more traditional process of investing. However, because it more closely resembles the real world of trading, users can gain valuable experience and an education that some others simply don’t provide, and it can all be done with a few taps on your screen.
The Bottom Line: If you’re feeling confident and want to jump into the world of investing while still having access to educational resources and guidance tools, this app might be a good option for you. If, however, you’re still feeling hesitant, you might want to poke around some of the other (although generally less profitable) apps on this list first, just to get a feel for the process.
New Ways to Invest
If you want to start investing, you can rest assured that there are a number of resources out there designed make the process less intimidating. While some of these investment apps might not make you rich, they can provide helpful knowledge and serve as good practice until you’re ready to wade in a little deeper.
Do you have a favorite app or service for investing? Feel free to share in the comments below!
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- Fundamental Stock Analysis (and More Financial Advice) for Beginners
- How to Be Financially Free: 12 Money Habits for Building Wealth
- Expense Tracking for Freelancers: How to Set Up for Tax Season
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