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.
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:
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.
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.
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:
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.
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:
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.
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:
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.
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:
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.
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:
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.
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 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.