The Best Apps for Investment Beginners — Even If You’re Starting with a Few Bucks
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PEOPLE’s Real Tips for Real Life presents practical answers to some of the most commonly asked questions around finance, employment and preparing for the future — even when that future can seem very uncertain.
If you are looking to start investing, one option is apps that allow you to start with as little as $5.
"The best investing app really depends on your personal situation," Arielle O'Shea, investing and retirement specialist at NerdWallet, tells PEOPLE. "There are a few apps that cater toward beginners and they're not all going to be best for everyone."
Erin Lowry, author of Broke Millennial Takes On Investing, says the advantage of a lot of the micro-investing apps is that they were often built with the beginner investor in mind, "which means that they're very user friendly and a lot of them have a pretty significant education portal."
"They do a very strong job of making people feel, 'OK, I can invest and this is something I can do.'"
David Rodgers Photography Erin Lowry
So how does one decide which app to try? Figure out your investing goals, says Lowry.
"Are you interested in just getting a good return? Are you interested in playing around with actually investing in individual stocks? Are you interested in doing more social conscious kind of investing?" she asks. "Different apps have different focuses."
The best apps don't require much money to open an account and have an education component, either as pop ups or a blog, which is "a really helpful way for a beginner to sort of feel like their hand is getting held without the price tag of a certified financial planner," says Lowry, "or any other sort of broker that they pay a higher premium for."
Some of these apps take the thinking out with robo advisers — algorithms that create and manage portfolios automatically.
"I like the idea of micro-investing apps and robo advisers in terms of how it kind of democratizes investing," says Lowry. "It gives people who don't have a lot of wealth access to the market."
While it's tempting to start trading stocks, Lowry suggests creating a diversified portfolio through buying ETFs and index funds.
"If you want to take 5 percent of your total investing portfolio and do some individual stock picking and kind of learn how it works, that's fine," she says, "but that really shouldn't be the bulk of how you're trying to build your investment portfolio, especially in the beginning."
Bellow, Lowry and three other investing experts highlight the best investing apps for beginners today.
1. Acorns: For the beginner who wants automated investing
Acorns is an easy-to-use app geared for those who want to get started in investing and saving, even with just $5 to get started, and then be hands off.
"Acorns is very popular," says O'Shea. "It will do all the work of managing your portfolio."
courtesy NerdWallet Arielle O'Shea
When signing up, Acorns asks you about your investment goals, such as seeking high-growth potential or conservative growth. You pick your level of investing knowledge, and how much money you wish to invest. Acorns then creates a portfolio for you.
This guidance is good for a new investor because "they don't know where to begin," says Dominique Broadway, founder of Finances De-mys-ti-fied. "They don't know what their risk profile is, if they are more conservative, or where to keep cash alternatives."
Rhea Whitney Photography Dominique Broadway
In addition to the option of funding the account with as little as $5, Acorns offers the option of Round Ups — using the spare change you have after a purchase to invest in exchange-traded funds (ETFs), and doing this automatically from the checking or credit card account linked to your Acorns account. (Acorns does not allow you to buy and sell individual stocks.)
For example, if you buy groceries for $9.50 and you pay for them with the account linked to Acorns, the app will round up the amount to $10 and what would have been change of 50 cents is invested in the portfolio.
Or if you link it to a checking account that has automatic payments to your phone bill of $99.83, it will round up 17 cents that is added to your account.
Another unique feature is its “Found Money” — a partnership with more than 350 brands that acts like a cash back option on a credit card. For example, for every Walmart purchase, they will invest 1 percent of the total into your Acorns account.
Acorns charges a fee of $1 a month for its basic spare change investment option and up to $5 a month for its Acorn Family option of unlimited investment accounts for you and your children, a checking account and other services.
2. Stash: For beginners who want to choose their investments and get an education
Stash has no minimum to invest, and lets you buy a portion of individual stocks, bonds and ETFs, with an emphasis on education.
While Stash has a feature called Auto-Stash that allows scheduling regular investments and round-up investments (similar to Acorns' feature), it doesn't manage your investments directly.
"If you want to be a little bit more hands on or you want sort of an education on how to pick investments and how to find the right investments for you, then Stash is a good option," says O'Shea. "You're going to have to pick and choose and build your portfolio by yourself and you also have to manage it on an ongoing basis."
With Stash's emphasis on education, "it is kind of like training wheels for you to learn how to invest on your own," O'Shea says.
This measured approach is a wise one for beginner investors, says Tara Falcone, a certified financial planner and founder of the financial education company ReisUP.
"While this style of investing is kind of considered maybe a little less exciting than day trading individual stocks," she says, "it can really help newbies get comfortable seeing their account balance fluctuate with the market before they start putting more capital at risk."
courtesy Tara Falcone Tara Falcone
One helpful feature: Stash creates user-friendly names for many of the ETFs on their platform.
"If you're a new investor, some of the names of these funds might sound completely foreign to you," says O'Shea. "But Stash will rename a biotech ETF 'Modern Med.' It's a cutsey way of identifying what the ETF really is and what the underlying investments are."
Another feature is that they have a focus on socially responsible investing. "They have a lot of investments that are aligned around certain values," she says. "So if that's important to you, it can be a good choice."
Fees range from $1 to $9 monthly, starting with a "Beginner" account that allows you to invest as little as $1 for fractional shares of individual stocks and exchange-traded funds.
Its $3 per month "Growth" account adds the feature of investing in IRAs while its $9 per month "Stash +" account adds investment accounts for two children and a monthly market research report.
3. Betterment: Automatic investing tailored to your goals
"If you want to be more hands off with your investing, especially for things like retirement, then a robo advisor such as Betterment might be a good option," says Falcone. "They can also help new investors plan and invest for other large financial goals such as building up an emergency fund and putting a down payment on a house."
Betterment invests your money into ETFs based on your desired level of risk. The firm manages the buying and selling of funds in your portfolio and provides advice based on your financial goals.
In addition to offering a wide range of regular brokerage and retirement account options, Betterment charges .25 percent of your account balance (with a $0 minimum required to start). The Premium account charges .40 percent of your balance, with a minimum of $100,000 invested, and gives you unlimited access to its certified financial planners. If you have a non-Premium account, the "Getting Started Package" provides a 45-minute call at $199, while other planning packages run $299 for a 60-minute call.
