Table of Contents
Introduction
In today’s fast-paced digital world, investing is no longer restricted to Wall Street professionals or the wealthy. Thanks to modern technology, anyone with a smartphone and a few dollars can get started with investing. The rise of investment apps has made it easier than ever to enter the stock market, manage portfolios, and grow wealth, even with minimal capital. Whether you’re just starting or looking to dip your toes into the world of investing, choosing the right platform can make a world of difference. In this guide, we’ll explore some of the best small investment apps for beginners and why they stand out.
Why Use Investment Apps?
Investment apps have revolutionized how people invest by making the process user-friendly, affordable, and accessible to all. Here’s why they are ideal for beginners:
- Low Barriers to Entry: Many investment apps allow you to start with just a few dollars, perfect for beginners without significant capital.
- Ease of Use: Investment apps are designed with simplicity in mind, so you don’t need to be a financial expert to get started.
- Automation: Most apps offer automation features, allowing you to invest in a hands-off manner through options like recurring investments or robo-advisors.
- Diverse Investment Options: These apps offer various investment options such as stocks, bonds, ETFs, and cryptocurrencies, providing flexibility for all types of investors.
Now, let’s take a deep dive into the best investment apps for beginners.
1. Robinhood: Best for Commission-Free Trading
Robinhood is a pioneer in the world of commission-free trading. It allows users to invest in stocks, ETFs, and cryptocurrencies without paying any commissions. Robinhood’s easy-to-navigate interface and zero-fee structure make it one of the best investment apps for beginners.
Key Features:
- No commission fees: You can trade stocks, options, ETFs, and cryptocurrencies without any extra cost.
- Fractional shares: Robinhood lets you invest in partial shares of stocks, which is perfect for those who want to invest in expensive stocks like Apple or Amazon but don’t have enough capital.
- Real-time market data: The app provides live market updates and notifications, ensuring that users are always informed about their investments.
- Cash management: Robinhood offers a high-yield savings account with no fees and access to over 75,000 ATMs.
Why Robinhood is Great for Beginners:
Robinhood is excellent for beginners because it removes common barriers such as fees and account minimums. Its clean interface makes it easy for anyone to start investing, and the platform offers a learning center to help new investors understand the stock market.
Drawbacks:
- Limited educational tools: While Robinhood is intuitive, it lacks in-depth educational resources that can be essential for new investors.
- Customer support: Some users report slow customer service response times.
2. Acorns: Best for Automatic Savings and Micro-Investing
Acorns stands out from other investment apps by rounding up your everyday purchases and investing the spare change into a diversified portfolio. For those who find it difficult to save or have a limited budget, Acorns makes investing almost effortless.
Key Features:
- Automatic round-ups: Acorns links to your debit or credit card and rounds up your purchases, investing the spare change.
- Pre-built portfolios: Based on your financial goals and risk tolerance, Acorns provides a pre-built diversified portfolio of ETFs.
- Recurring investments: You can schedule automatic deposits as low as $5 to grow your portfolio over time.
- Retirement and checking accounts: Acorns offers Acorns Later, an individual retirement account (IRA), and Acorns Spend, a checking account with no fees.
Why Acorns is Great for Beginners:
Acorns is perfect for beginners who don’t have large sums to invest upfront. By automating investments, even people who are not actively thinking about their investments can grow their wealth over time. The app’s focus on micro-investing makes it an excellent choice for those who want to start small.
Drawbacks:
- Monthly fees: Acorns charges $3 per month for its basic account, which can be a high percentage for very small investors.
- Limited control: Investors have limited control over which stocks or ETFs they invest in, as the portfolios are automatically selected.
3. Stash: Best for Personal Finance and Learning
Stash is an all-in-one platform that combines personal finance tools with investing. It’s ideal for beginners who want more control over their investments but still need guidance on how to build and manage a portfolio.
Key Features:
- Customizable portfolios: Stash allows you to choose your own investments from a curated list of ETFs and stocks based on your interests and goals.
- Fractional shares: Like Robinhood, Stash allows you to invest in fractional shares, enabling you to start with as little as $5.
- Educational resources: Stash provides detailed educational content and financial advice tailored to your investing habits.
- Banking and retirement options: Stash also offers a checking account with cash-back rewards, as well as retirement account options.
Why Stash is Great for Beginners:
Stash is perfect for beginners who want to learn more about personal finance while building an investment portfolio. Its educational features and easy-to-use interface help new investors make informed decisions. Additionally, Stash offers a range of account types, including retirement accounts, making it versatile.
Drawbacks:
- Monthly fees: Stash charges between $1 to $9 per month, which can eat into the returns of small investors.
- No tax-loss harvesting: Unlike some robo-advisors, Stash doesn’t offer automated tax-loss harvesting.
4. Betterment: Best for Robo-Advisor Features
Betterment is one of the top robo-advisors in the market. It simplifies investing by creating a personalized, diversified portfolio of ETFs based on your financial goals. Betterment’s automated approach to investing makes it one of the most beginner-friendly investment apps.
Key Features:
- Automated investing: Betterment builds a personalized portfolio of ETFs based on your risk tolerance and goals.
- Tax-efficient investing: Betterment offers tax-loss harvesting and rebalancing to maximize your after-tax returns.
- Goal-based planning: You can set different financial goals such as retirement, buying a house, or saving for a vacation, and Betterment will create an investment plan tailored to each goal.
- Retirement accounts: Betterment offers IRAs and 401(k) rollovers, making it a great choice for long-term planning.
Why Betterment is Great for Beginners:
Betterment is ideal for those who want a hands-off approach to investing. Its robo-advisor automatically manages your investments, so you don’t have to worry about picking stocks or rebalancing your portfolio. It’s also great for long-term investors with its goal-oriented planning.
Drawbacks:
- No real-time trading: Since Betterment is a robo-advisor, you won’t have the ability to trade individual stocks or ETFs in real-time.
- Management fees: Betterment charges an annual management fee of 0.25%, which can be higher than some other apps, especially for large portfolios.
5. Wealthfront: Best for Automated and Goal-Based Investing
Similar to Betterment, Wealthfront is a robo-advisor that automatically manages your investments based on your financial goals and risk tolerance. Wealthfront offers a range of investment options, including stocks, bonds, and real estate.
Key Features:
- Automated portfolio management: Wealthfront’s algorithm builds and manages a diversified portfolio for you.
- Tax-loss harvesting: Wealthfront automatically performs tax-loss harvesting to help you reduce your tax bill.
- Financial planning tools: The app offers advanced financial planning features that allow you to plan for milestones like retirement, buying a home, or paying for college.
- Low fees: Wealthfront charges an annual management fee of just 0.25%, making it a low-cost option for automated investing.
Why Wealthfront is Great for Beginners:
Wealthfront is perfect for beginners who want a hands-off approach to investing with access to advanced financial planning tools. It offers goal-based investing and tax-efficient strategies, helping you grow your wealth over time without the need for active management.
Drawbacks:
- No human advisors: Wealthfront is entirely automated, so if you prefer speaking to a financial advisor, this might not be the app for you.
- Limited customization: Although Wealthfront manages your portfolio, you have limited control over which assets are selected.
6. SoFi Invest: Best for Free Financial Advice
SoFi Invest is part of the larger SoFi ecosystem, offering a range of financial services such as loans, insurance, and investing. SoFi Invest offers both active and automated investing options, making it a flexible platform for beginners.
Key Features:
- No commission fees: Like Robinhood, SoFi Invest offers commission-free trading of stocks and ETFs.
- Fractional shares: You can invest in small portions of high-priced stocks, starting with just $5.
- Access to financial planners: One of SoFi’s standout features is access to free financial advisors who can guide you through your investment journey.
- Crypto trading: For beginners interested in cryptocurrency, SoFi Invest allows users to buy and sell popular cryptocurrencies such as Bitcoin and Ethereum.
Why SoFi Invest is Great for Beginners:
SoFi Invest is ideal for beginners who want to manage their own investments while having access to professional financial advice. Its combination of automated and active investing options gives users flexibility, and the absence of fees makes it budget-friendly.
Drawbacks:
- Limited research tools: While SoFi is a great all-around platform, it lacks advanced research tools that experienced investors might want.
- Limited portfolio options: Compared to other robo-advisors, SoFi Invest has fewer pre-built portfolio options.
Conclusion: Finding the Right Investment App for You
Choosing the best investment app depends on your financial goals, investment preferences, and budget. Whether you prefer a hands-off approach with robo-advisors like Betterment and Wealthfront or want to trade commission-free with apps like Robinhood and SoFi Invest, there’s an option for every beginner investor.
Each app offers unique features that cater to different types of investors, so it’s essential to evaluate your needs. For those who value automation, Acorns or Betterment may be the best fit. If you prefer more control and learning as you go, Stash could be a great option.
Remember, the best investment strategy is one that aligns with your financial goals and risk tolerance. Start small, stay informed, and watch your investments grow over time.
FAQs
Q. What is the best investment app for beginners?
- Robinhood, Acorns, and Betterment are some of the best options for beginner investors.
Q. How much money do I need to start investing?
- Many apps, such as Robinhood and Acorns, allow you to start investing with as little as $5.
Q. Are investment apps safe?
- Yes, most investment apps are regulated by financial authorities, and funds are typically insured. However, always ensure you’re using a reputable platform.
Q. Can I lose money using investment apps?
- Yes, investing in the stock market comes with risks, and it’s possible to lose money if your investments decrease in value.
Q. Do investment apps charge fees?
- Some apps, like Robinhood, offer commission-free trades, while others like Acorns and Betterment charge small fees for portfolio management or premium services.