Are Investment Apps a Good Idea?
Our world is changing with technology—in a good way. When considering the effect of technology on the financial world, we see it becoming more inclusive and accessible. Because, as we’re all aware, parts of finance have seemed like an exclusive club for far too long.
Learning about investing has seemed lofty or futile to those who didn’t know where to start—or if investing would even benefit them once they started. However, gone are the days when you needed to buy an “Investment for Dummies” book and do hours of research on the Internet. Apps have put step-by-step investment education in the palms of our hands.
What a time to be alive, right?
Investment apps are empowering people to take control of their finances, and we think that’s great. If you’re considering jumping on the investment app bandwagon, we have a few things to talk about first.
Before You Download, Identify Your Goal
Before you download your new investment app, ask yourself one question: What is my goal? Depending on your answer, it could help you choose which app will best serve you. Not all investing apps are equal, and they definitely aren’t meant to be.
Here are four investment apps, all with different objectives.
- Robinhood—The goal of the Robinhood investment app is free stock trading. When they say free, they mean it. Robinhood takes zero commissions, making it the perfect app for someone looking to invest in the stock market for the first time. You can connect your bank account and start trading immediately with helpful news articles and analysts’ insights to guide you.
- Stash—The goal of the Stash investment app is to teach you how to invest wisely. You can start investing with only $5, while Stash shows you how to choose the best stocks, EFTs, and bonds. Like Acorn (see number 3 on this list), Stash rounds up your purchases to the nearest dollar to save and invest automatically. You can also set a schedule to move money at the same time every week or month or opt into auto-savings where the app will save automatically based on smart analytics.
- Acorns—The goal of the Acorns investment app is to invest your spare change. Like Stash, Acorns rounds up your change to the next dollar every time you make a purchase. Users can work toward financial wellness by investing their change or saving it for retirement. Acorns also offers easy-to-understand articles and videos from financial experts to help you along the way.
- Stockpile—The goal of the Stockpile investment app is to share the wealth. You can use Stockpile to make stock market trades for only 99 cents and without monthly fees. The app allows you to buy fractional shares of stocks. You can also put money into an account to provide your friends or family with a stock gift card. What makes Stockpile so different is that parents and grandparents can gift stocks to kids to spark an interest in investing. It offers a gift that will both teach and provide long-term value.
Use Investment Apps as a Tool, Not a Plan
Investment apps are great for learning and investing, but take them for what they are—tools.
If you’re rounding up to the nearest dollar (with Stash or Acorns, for example), it’s going to take a while to build any real wealth. And, learning to invest with Robinhood or Stockpile is an excellent way to spend your time. However, without a strategy, it’s challenging to get far.
Notice that we said “challenging” and not “impossible.”
These apps are made to teach and help you invest or save passively. While they’re both great goals, you’ll need a consistent plan if you want to use investing as a step toward your financial goals: college savings, retirement, and so forth.
Investment apps are perfect stepping stones, but it’s wise to involve an advisor when you’re ready to incorporate investment into your overall financial strategy.
Southwestern Investment Group can help you take your interest in investment to the next level. We explain investing in plain terms, empowering you to make serious moves on your investment portfolio.
Our team of financial advisors works with you to create a well-rounded financial strategy that aligns with your future goals. Contact us to learn more about our 3-step process and how it can lead you to the next financial step in your life.
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