When using investment apps, it’s important to consider factors like fees, account minimums, available investment options, user interface, customer service, security features, and any additional perks or tools offered. You should also be aware of your own financial goals, risk tolerance, and investing experience to choose the app that best fits your needs.
Remember, investing always carries some level of risk, so it’s important to do your research, stay informed, and make decisions that align with your financial goals and risk tolerance. With the right investment app and a solid investment strategy, you can start building wealth and working towards your financial goals.
Keep the following factors in mind when you decide to start investing.
Decide How Much You Want to Invest
Before getting an investing app, you should have an amount or percentage in mind for how much you want to invest each month or each year. This helps you set financial goals and expectations for yourself and consistently invest—the more you put in, the more you get out, generally speaking.
While there is no “perfect amount” for each investor to put away, financial experts estimate that investing around 15% of your pre-tax income is ideal. So, if you make $75,000 annually, you should be setting aside around $11,250 to invest—ideally. Remember that your life circumstances might change and heavily reduce, or increase, the amount you can invest. That’s OK. What matters is that you are consistently investing some money each month, even if that amount fluctuates from time to time.
Understand the Types of Investments Available
Investment apps give you all kinds of investment options at your fingertips. But before putting your money into just any asset, you need to know exactly what you’re getting into. Here’s a brief list of common investment types to help you get started:
- Stocks: Shares of ownership in a company that have the potential for capital appreciation and/or dividends.
- Bonds: A type of IOU from a government or corporation. In exchange for lending your funds, the bond issuer promises to pay back your investment with interest at a defined point.
- Exchange-traded funds (ETFs): An ETF is a collection—or pool—of investments that can be purchased on a major stock exchange. The collection could consist of certain stocks in a sector like manufacturing or short-term bonds, for example.
- Mutual funds: Like ETFs, mutual funds are pools or collections of investments. They are different from ETFs in that they are actively managed by professionals. Mutual funds also have a mandate or an investing protocol they follow.
- Options: Options are a contract that gives you the right, but not the obligation, to buy or sell a stock at a specific price in the future.
Make Sure the App Is Secure
When it comes to using an app that contains sensitive information, you need to ensure it’s safe. Even more so if the app has access to your money.
An easy way to check if an investing app is secure is by first checking if the company that owns it is registered with the Securities Investor Protection Corporation (SPIC). If something were to happen to your money while it was with an SPIC brokerage, the SPIC insures your investments up to $500,000. Cryptocurrency is not included.
Check if the app in question is also registered with the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). If it isn’t, that could be a red flag.
Finally, make sure the app has robust security protections for its users. Features like biometric login, two-factor authentication, encryption and additional PIN requirements can help keep your investments safe.
How to Use an Investing App
For the most part, the best investing apps are easy to use and simple to navigate. That said, it might take some getting used to before you feel comfortable. Here’s a short step-by-step guide on how to use an investing app for the first time. Keep in mind that each app is different—the steps below are only a guideline.
1. Create an account
- Once downloaded and installed, open the app and tap on the sign-up or register button.
- Provide any required information, such as name, email, phone number and other financial details.
- Set up a secure password and enable two-factor authentication (if available) for added security. If available, consider adding a PIN too.
2. Complete identity verification
- Most investment apps require identity verification due to regulatory requirements.
- Provide details such as your date of birth, Social Security number (or equivalent) and address.
- Upload necessary identification documents, such as a driver’s license or passport. You’ll also likely need to take a selfie to verify yourself.
- Wait for approval, which can take anywhere from a few minutes to a few days.
3. Select an account type
- Some investment apps may offer multiple investment account types. Once you’ve finished the ID verification process, you’ll need to choose an account type to start funding money to.
4. Link a bank account or funding source
- Navigate to the funding section in the app associated with your desired account.
- Link a bank account or other payment method to start depositing funds.
- Some apps may allow wire transfers, PayPal or cryptocurrency funding.
5. Make your first investment
- Decide what you want to invest in based on your research.
- Enter the amount or number of shares you want to purchase. Some apps may allow you to purchase fractional shares but some may only allow non-decimal orders.
- Review transaction details, including fees, and confirm your purchase.
6. Set up automatic investments (optional)
- If the app allows, you can enable automated investing or recurring deposits to build your portfolio over time. This feature will pull funds from your linked funding source on a recurring rotation.
7. Monitor and manage your investments
- Regularly check your portfolio’s performance using real-time stock quotes and in-app updates.
- Most investment apps have tools like alerts, performance charts and news updates to keep you informed.
- Adjust your portfolio periodically based on market conditions and your financial strategy.
Thinking of Investing? There’s an App for That
With the ways technology has progressed, there is an investment app for everyone, regardless of your investing style and goals.
Do you want to wade into the complex waters of option trading? Public’s investing app is perfect for you. Are you a new trader looking to try out investing? E-Trade’s got you covered. Are you a middle-of-the-road investor who has some experience? Fidelity’s mobile app is a good fit. Want hands-off investing that suits your risk preferences and financial goals? Betterment’s app might be right for you. And, if you want an app that does it all, Charles Schwab’s app could be your go-to.
Investing is always a good idea regardless of where you are on your journey to financial freedom.
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