As a beginner investor, you might wonder whether it makes sense to use a trading app to invest in the stock market. You might also be wondering which are the best beginner investing apps to use. After all, there are many available and some are better than others.
Addition Financial members often turn to us for investment advice. We’ve reviewed some of the automated investing and robo advisor options that are available. We also reached out to some of our favorite financial experts to ask them about the benefits of using investment apps and which ones they recommend. Here’s what we learned.
What are the Advantages of Using an Investing App to Trade Stocks?
Investing apps seem to be everywhere and you might be wondering whether it makes sense to use a robo advisor to build an investment portfolio or if you’d be better off working with a professional financial advisor. Here are some benefits of going the automated investing route by using an app.
According to Jenna Lofton, a Certified Financial Advisor at StockHitter.com:
“Beginning investors most definitely should use an app. They are very easy to understand and can help you achieve your financial goals (saving debt, retiring early, etc.). Apps will also tell you how close you are to reaching your goal and how much money you need to put into it each month/year in order for that to happen.”
Jake Hill, the CEO of DebtHammer, believes that investment apps have made investing more affordable and accessible for a new investor. He told us:
“If you don't have much to invest, using an app is a better bet. A financial advisor is for people with a lot to invest and a plan they want to achieve.”
Raj Patel of Financeshed told us something similar, emphasizing the cost and accessibility of investing apps:
“The cost of [an investing app] is... lower than [a] financial advisor. Many… charge $0 to open the account while financial advisors may charge 1%. Robo-advisors have automated the investing industry and can handle thousands of portfolios where other financial advisors can’t handle too many accounts at once.”
Shannon Terrell, a Senior Investments Writer at Finder, added a point about the ability of beginning investors to learn by using an stock trading app:
“There are plenty of beginner-friendly online platforms and some even offer paper trading – a feature that lets you practice your trading strategies with simulated money. A financial advisor offers expertise and guidance but is really only appropriate for hands-off investors that prefer to have someone else handle their portfolio.”
There are some potential disadvantages to working with a robo advisor as well. Some that our experts pointed out include the following:
- A financial advisor may be better able to understand the specifics of your financial goals and make recommendations of how much to save and invest to achieve them. A robo advisor will only have an algorithm to make recommendations.
- According to Ann Martin, the Director of Operations at Credit Donkey Crypto, “Apps gamify buying and selling stock in a way that tends to encourage day trading and other short-term investment strategies that don’t usually pay off for newcomers.”
- Ultimately, a professionally trained and certified advisor may help you to build your diversified portfolio more quickly and save more money than you could with an investing app.
Our belief is that investing apps can be a good way for a beginner investor to get their feet wet in the stock market, learn about how investments grow and begin to build an investment portfolio.
Best Stock Trading Apps and Investment Apps for Beginners
If you go to the Apple Store or the Google Store, you’ll find dozens of beginner investing apps and stock trading apps. They can be linked directly to your checking account and, after downloading them, you can begin trading stock immediately. Here are some to consider, including the ones that our financial experts were most enthusiastic about.
#1 Acorns
Acorns is one of the most popular and recognized apps for investing and growing your money. Here are some of the things that our experts said about it:
- Acorns has an easy-to-understand interface that takes a lot of the guesswork out of investing for beginners.
- The app provides $5 for free, which you can then invest in the market.
- It uses very practical investment methods that are designed to help investors make the most of their money.
- The fee to get started is only $1 per month.
There are features that allow you to round up your spending and put the funds directly into your investments if you link your checking account. However, the tiered fees may not be advantageous for people with large portfolios.
#2 SoFi
SoFi is an investment platform that allows you to trade both stocks and cryptocurrencies. It offers investors choices that make it easy to build wealth. Some of the things our experts mentioned include the following:
- Carter Seuthe, the CEO of Credit Summit, told us that “SoFi doesn’t charge a fee and it’s easy to use.”
- There are no commissions and fees charged for trades and accounts.
- It has an intuitive interface and features to help newbies build their knowledge.
One of the things that we like about SoFi is that you can buy fractional shares, so even if the price of a full share of stock is out of your reach at first, you can still buy a piece of the company and you may eventually be able to buy full shares. We also like the option of investing in IPOs and that SoFi allows you to choose between active and passive investing with a robo advisor.
#3 Public
Public is an investing app with some unique features that make it ideal for beginner investors. Some of the features our experts mentioned include the following:
- Public has an intuitive interface.
- Built-in learning means you can click on an unfamiliar term and learn what it means immediately.
- It also provides explanations for a stock’s performance, so you can decide whether it’s a good match for your financial goals.
Like SoFi, Public offers investors the option of buying fractional shares. What we particularly like is that Public puts a warning on volatile or risky investments. That way, beginning investors can make an informed decision about the stocks they buy and avoid high-risk options if they want to do so. We should also note that Public was voted the best overall investment app by ConsumersAdvocate.org.
#4 Robinhood
Robinhood is an investing app that’s been in the news, so you may already have heard of it. Here are some of the features that you may be interested in:
- No commissions on trades.
- The option to buy fractional stocks and invest in IPOs.
- When you sign up, you’ll get your first stock for free.
- You can buy fractional shares.
Robinhood has customizable notifications, so you can get as much information about the performance of your investments as you choose. They do charge for account transfers and some other services, but you’ll never pay a commission on your investments.
#5 Stash
Stash is a well-reviewed app for beginners that makes it easy to get started investing in the stock market. They have three account levels and you can choose the one that’s best suited to your needs. Some of the features we like include the following:
- Swipe and save each time you make a purchase to grow your investments quickly.
- Investors can choose to fund an IRA account to save for retirement.
- Access to professional advice with some of their subscription plans.
The beginner plan costs just $1 per month. If you upgrade to the Growth plan for $3 per month, you’ll get personalized advice for growing your assets plus access to their SmartPortfolio and RetirementPortfolio options. The Stash+ plan adds kids’ investment accounts, family budgeting and additional financial tools for your convenience. The fee is $9 per month.
#6 Betterment
Betterment bills itself as the app that gives investors the “tools, inspiration and advice” they need to become better investors. You can get started with a minimum deposit of $10 and choose whether you want to be hands on and manage your own investments or get advice from Betterment’s team of experts:
- Betterment helps beginning investors by focusing on ETF trades to diversify their portfolios and minimize risks.
- Provides optimized tax strategies to help you minimize your taxes.
- Offers a Socially Responsible Investing option for those who want their money to go toward ethical companies.
- Provides information about risk levels to help investors make smart choices.
Betterment charges a flat 0.25% fee annually, which makes it more expensive than some of the other options here. If you want the option to talk to a personal financial advisor, you can opt for their premium plan for a fee of 0.40% annually, or an advice package starting at $299.
Using an investment and stock trading app designed for beginners is a good way to get your feet wet in the stock market and start saving for your future. The apps we’ve listed here are the best available – so choose one and start achieving your investment goals!
If you prefer the personal touch, Addition Financial offers the MEMBERS Financial Services program. Click here to learn more or schedule an appointment with a CUNA Financial Advisor.
