Make Investing Simple Whether you’re putting away your first $1,000 or have been saving for the future for years, you’re going to want to consider investing your funds at some point. Doing so will allow you to maximize returns and exponentially grow your savings. Unfortunately, the investment process can be pretty intimidating, especially if you are starting out on your own. It’s hard to know how to begin, where to invest, how to balance your portfolio and even what sort of fees you should expect to pay along the way. That’s where the convenience and ease of today’s best investment apps can come into play. [youmaylike] What are Investment Apps? Once upon a time, your only choice for investing was to pick up the phone and call your stock broker to initiate a trade. You were charged for the service, either based on commission or as a flat fee per transaction. While stock brokers are still an option, you can take investing into your own hands these days, without ever needing to talk to another human. And it’s all thanks to investment apps and platforms. Today’s apps offer a range of services and features. With them, users can: Research funds and individual stocks. View fees and expenses related to investment choices. Invest funds on the go, and even automate regular contributions. Automatically reinvest earnings on current investments. Adjust portfolio for personal risk tolerance. View performance projections. Choose funds or individual stocks that align with personal beliefs, through portfolios based on socially-responsible missions. The best part? Investing through trusted apps is usually cheaper and faster and you’ll have instant access to your portfolio/reports at any time of day. Not only that, but you’ll also be able to set your investment risk tolerance, rebalance your portfolio and even reinvest earnings automatically. Who are Investment Apps Designed For? Whether you’ve been playing the market for ages or are ready to invest your first $100, the right investment app is worth considering. For those new to the stock market, apps will simplify the process and put the power of investing at your fingertips… literally. From your phone or computer, you can easily see portfolio recommendations based on your own goals, savings plans and even risk tolerances. The right app will tell you upfront how much you can expect to spend in fees throughout the year, and can even allow you to automate many of the more confusing aspects, such as picking well-performing stocks or even rebalancing. While investment apps are ideal for beginners, newbies aren’t the only ones who will see the benefits. Even seasoned investors will find the process easy to use, and may even learn that these platforms can maximize returns (and save them money in fees) along the way. Not to mention, many investment apps offer additional insight into specific funds, so you can choose to invest in companies that align with your own passions and beliefs. Now that you know why you should consider using an investment app for your own savings, let’s take a look at some of the best ones available today. Best Investment Apps Great for Beginners: Acorns Fees and expenses: For investors with less than $1 million invested, fees are between $1-3 per month depending on the account option you choose. Acorns is also free for college students. Beginning investment requirement: At least $5 to start Types of investments available: ETFs (exchange-traded funds) Portfolio options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive Automatic investing?: Yes Automatic reinvesting?: Yes Automatic rebalancing?: Yes If you want an easy, hands-off approach to investing that won’t leave your head spinning, Acorns is a great first choice. This app not only simplifies investing for beginners but allows investors to completely automate the process from start to finish. After connecting the app to your debit card, the app will “round up” each of your daily purchases, putting the savings into an investment holding account. Once you reach the minimum required, Acorns will invest this money on your behalf, based on your account preferences. The app will also reinvest your earnings, as well as rebalance your portfolio when necessary. Great for Truly Free Investing: Robinhood Fees and expenses: Robinhood is a free investment platform in every sense of the word, pledging to never charge company fees or commissions to customers. Beginning investment requirement: You’ll need $2,000 to get started. Types of investments available: ETFs, stocks, cryptocurrency and options. Portfolio options: Interest-based options such as Fashion ETF, Tech ETF and Energy ETF, as well as a standard S&P 500 ETF, all with personal risk tolerance settings. You’ll also find “collections,” which are individual stocks grouped according to specific interests — such as companies with female CEOs or that are in the social media sector. Automatic investing: No. Automatic reinvesting: No. Automatic rebalancing: Yes. A great option for beginners and experienced investors alike, Robinhood makes the process both easy and affordable. How affordable? Well, it’s entirely free. By offering a truly free experience, Robinhood saves investors some serious cash over time. Additionally, the platform makes it easy to choose individual stocks or ETFs based on personal interests. If you want to invest in cryptocurrency or options, you can also do so through Robinhood. One of the biggest limitations of the platform, though, is its automation. While you can set up automatic deposits into your account, you will need to manually invest those funds and then reinvest (or withdraw) your dividends. Stash Fees and expenses: $1 per month fee for those with less than $5,000 invested, or $2 per month for retirement accounts with less than $5,000. For users under 25, fees on retirement accounts are waived. If you have more than $5,000 invested, your fee will be 0.25% annually. Beginning investment requirement: You’ll need at least $5 to begin investing (fractional shares are available) Types of investments available: ETFs (exchange-traded funds) and fractional stock shares Portfolio options: Too many to name, ranging from things you Want (portfolios that are conservative to aggressive mixes), things you Believe (such as groups of companies that believe in clean energy, LGBT rights, etc.), and things you Like (tech, retail and social media companies). Automatic investing: Yes. Automatic reinvesting: No. Automatic rebalancing: No. The closest competitor to Acorns, Stash seeks to make investing easy for everyone, regardless of your goals and passions. They have three account options to choose from, allowing you to manage your investment and retirement accounts, or even a child’s education savings through custodial accounts. With Auto-Stash, you can set any number of automatic investment options and transfers. However, Stash will not rebalance your portfolio for you, nor will they reinvest dividends on your behalf. Wealthfront Fees and expenses: 0.25% annually. Beginning investment requirement: $500 minimum initial investment. Types of investments available: ETFs (exchange-traded funds), individual stocks, retirement accounts (401k, IRA), 529 savings plans and trusts. Portfolio options: 11 asset classes to choose from, including natural resources and real estate. Automatic investing: Yes. Automatic reinvesting: Yes. Automatic rebalancing: Yes. Wealthfront’s investment platform is designed to be friendly for users of all experience levels. If you’re a seasoned investor, you’ll enjoy all of the options available to you, including the ability to manage your retirement accounts, education savings and even non-profits or trusts. If you’re a newbie, their free financial expertise center is the perfect place to learn all about investing and your future. TD Ameritrade Fees and expenses: The managed, automatic portfolio investment option (called Essential Portfolios) is available with a 0.30% advisory fee. Beginning investment requirement: $5,000 minimum for managed portfolios (no minimum requirement for traditional trading). Types of investments available: Stocks, ETFs, options, mutual funds, futures, bonds/CDs, Forex and cryptocurrency. Portfolio options: Essential Portfolios (EP) offer investors a range of options from Conservative to Aggressive, based on your passions, preferences and tolerances. Automatic investing: Yes, with EP. Automatic reinvesting: Yes. Automatic rebalancing: Yes. A more traditional brokerage app, TD Ameritrade is one of the most recognizable names in the industry. You can easily educate yourself on all things financial, thanks to their free videos and posts. If you want a traditional experience, you can choose your trades and pay per transaction. Prefer a more streamlined, automated approach? Opt for their Essential Portfolios, a hands-off investment option (robo-advisor) that charges a flat monthly fee and requires little-to-no oversight from you. Plus, their app makes the investing process easier than ever with a user-friendly interface, price alerts and no minimum to get started. If you prefer a desktop experience, this is also available to you through TD Ameritrade. Bottom Line Getting started with investing can be intimidating. With all of the terminology and account options out there, it’s easy to want to run and hide. Thanks to some of today’s best investment apps, though, you can not only get started with your first portfolio but also watch your money quickly grow… no matter how much of a beginner you may be! It’s important to choose an app that offers you the portfolio options and features you want most, with fees and deposit minimums that match your financial needs. The five apps above are our favorites for beginners, making that first foray into investing easier than ever before. The hardest part will be choosing the one you love most!
Get Your Finances in Order
Creating a personal budget may seem complicated, but it doesn’t have to be. A budget helps keep your spending in line and it helps meet long-term goals. In this article, we’ll look at how to make a personal budget. We’ll cover analyzing your spending, income versus expenses and how to divvy up your payments, among other things.
How to Begin Analyzing Spending
Before you make a personal budget, it helps to analyze your spending. By analyzing your spending, you can see where all your money is going. Thankfully in today’s increasingly cashless society, analyzing your spending is easier than ever before. The simplest way to analyze your spend is to review your credit card statements, bank account statements and receipts.
If you’re like most people and you use your credit card most of the time, this may be your one and only step. Many of us get into the habit of blindly paying our credit card statements without taking the time to review our expenses line by line. By taking the time to review each and every expense line of your credit card statement, you could not only spot possible fraud and duplicate charges, but also get a good snapshot of where your money is going. For example, spending $5 here and there on coffee may not seem like a lot, but when you realize that you’re spending $150 a month on the “occasional” coffee, it can be a real eye-opener.
Once you’ve reviewed your credit card statement, you’ll want to shift your focus to your bank account statements. Even if you don’t use your debit card a lot, reviewing your bank account statement is an important second step. Most of us have bills automatically coming out of our bank account (some companies don’t let you charge some bills on your credit card). For that reason, you’ll want to review your bank account for charges. This will remind you of any expenses you may have forgotten about. It will also give you a good idea about how much money you have coming in on a monthly basis (remember that your paycheck is after tax, not before tax).
The last step may not be necessary for some, but if you find yourself using cash to make purchases on a regular basis, you’ll want to get into the habit of holding onto receipts, if you aren’t already doing so. To make things easier, you can create a file folder of receipts in your filing cabinet at home. Once a month you can add up and categorize your receipts. For example, you can create a category for food, transportation, entertainment, etc.
By taking the time to review your credit card statements, bank account statements and cash receipts, you can truly analyze your spending for the last few months.
Income versus Expenses
In a budget, you have income and expenses. Simply put, income is any money that you have coming in, while expenses is any money you have going out.
All things considered equal, you tend to have less control over your income versus your expenses. If you are a full-time permanent salaried employee, you can pretty much rely on your paycheck. However, for those who work on commission, your paycheck is determined based on how you perform, making it more difficult to budget.
If you find that your income isn’t enough, there are things you can do to boost it. For example, you could get a part-time job or take on a side hustle, such as writing or photography.
When budgeting, remember to use your after tax (net) income instead of your before tax (gross) income, since household expenses are paid with after tax dollars.
When compared to income, we tend to have a lot more control over our expenses. Expenses can be divided into two broad categories: fixed and variable expenses. Fixed expenses are expenses that generally stay the same on a monthly basis — for example, your mortgage payments, home insurance and gym membership. Meanwhile, variable expenses can change on a monthly basis. Examples of variable expenses include water, heat and hydro.
By reviewing your fixed and variable expenses on a regularly basis, you can make sure you’re getting good value for your spending. If you find you’re spending more than you make, that’s a problem. You can take corrective action and adjust your spending to bring it back in check, so you’re not running a deficit on a monthly basis.
How to Divvy up Payments
Instead of just lumping all your expenses (payments) into two broad categories, fixed and variable, it helps to further divvy them up. You can divvy up your payments however you like, but I find it helps to have spending categories. For example, you can have spending categories related to your home, including mortgage, home insurance, utilities, repairs and maintenance. Outside your home, other spending categories you might have include groceries, transportation, dental, medical, clothing, gifts, restaurants, travel and more.
When creating a budget, instead of simply saving whatever money is left over, it helps to make savings a priority. You can do that by allocating a portion of your income to savings. Rather than just creating a broad savings category, it helps to create savings subaccounts with specific purposes — for example, an emergency fund, family vacation, down payment, etc. By treating savings as a priority, you’re more likely to meet your savings goals.
Likewise, it’s a good idea to allocate a portion of your paycheck toward debt repayment. Whether you have student debt, a line of credit, car loan, mortgage or credit card debt, by allocating a portion of your income in your budget toward paying those off, you’re more likely to have money left over after you’ve paid all your bills to actually make those debt payments.
Once you’ve divvied up your paycheck between payments and savings, ideally every single dollar will be allocated. It’s okay if you have a $100 surplus, but ideally your budget will be equal to nil. However, if you find that there’s a deficit, you can adjust your budget to bring your spending in line.
How to Make Spreadsheets for Tracking
To make the most of your budget, it’s important to track your spending. Tracking your spending involves comparing the amount you have budgeted for a category against the actual amount you spent. If your spending is the same, you’ve come in on budget. If your spending is less, you’ve come in under budget. However, if your spending exceeds a spending category, you’ve come in over budget. If you do that on a regular basis, you’ll either need to reduce your spending in that category or increase the amount you have budgeted toward it.
It helps to use a spreadsheet to keep track of your expenses. A spreadsheet doesn’t have to be complicated. Start by listing out all the budget categories mentioned above. Next, you’ll want to create three headings: estimate, actual and difference. Estimate is for the amount you’ve budgeted for a spending category, actual is how much you spent in a spending category and difference is the difference between the two. As previously mentioned, ideally you’d like it to break even or be a surplus. If you have too many deficits in spending categories, you’ll come in over budget and not meet your savings and debt repayment goals.
What Should You be Aware Of
A budget isn’t worth the paper it’s written on if you don’t use it. Get in the habit of regularly reviewing your budget and making adjustments when necessary. By doing that, you’re more likely to stay on budget and meet your savings and debt repayment goals.
How Can You Allocate Money Appropriately?
Allocating money appropriately is key if you want your budget to be as accurate as possible. You can allocate money appropriately by doing the first step in this article. By analyzing your spending, you can see how much to realistically set for various spending categories in your budget, rather than simply plucking numbers out of thin air. This in turn will help ensure your budget is as accurate as possible.
By doing the work up front of analyzing and tracking your spending on a regular basis, you can get the most out of your budget by ensuring it’s the most accurate possible.
How to Save in Certain Areas
For most families, the big three categories are shelter, food and transportation. By looking for ways to save in those areas, you can boost your overall savings rate. If you could save 5 or 10% in each of those spending categories, you could come up with an extra $100 per month or more. Not bad!
In terms of shelter, it’s a good idea to create a mock budget before you move into a place. List what all your expenses would be outside just the mortgage or rent. Examples of expenses include utilities, home insurance, repairs and maintenance. By doing that, you’re less likely to be blindsided by costs later on. You’re also less likely to find yourself in a situation of being “house rich, cash poor,” with all of your money going toward your shelter costs and little money to save, let alone have fun.
You can save money on food by cooking at home more often and dining out less. You can do this by cooking your meals in advance for the week, so you’re less likely to rely on fast food on those busy weekday evenings. Likewise, instead of buying your groceries at premium supermarkets, shopping at discount supermarkets will allow you to purchase food that’s often just as good quality for a lot less.
Saving money on transportation largely depends on the makeup of your household. For example, if you have children, taking the bus everywhere probably doesn’t make sense; but perhaps instead of owning two cars, you might be able to get away with owning only one. But if two cars are a must, you can try to stretch your vehicle buying dollar further by purchasing a two- to three-year-old used car from a registered car dealer instead of driving a shiny, brand-new car off the lot and having it lose half its value during that time.
These are just a few creative ways to save money. I’m sure you can come up with your own.
What to Focus On: Paying off Debt in a Realistic Way
If you have high-interest consumer debt, such as credit cards, you’ll want to focus on getting that paid off sooner rather than later. If you’re only paying the minimum payment, not only will it take you a long time to pay off, it will cost you a boatload of interest.
When setting a budget, similar to dieting you want to make sure it’s realistic. If you set a budget that’s too strict, you’re setting yourself up for failure. If you want to pay off your debts sooner, you’ll need to find extra ways to earn income, cut your expenses or both.
Again, make sure they are realistic and sustainable. If you’re working a nine-to-five job, working until midnight every night in retail probably isn’t realistic, but working a couple evenings a week until 9 p.m. might be.
Likewise, saying that you’ll spend nothing on entertainment probably isn’t realistic, but making plans to skip the movies once a week and watch a movie at home probably is.
With the extra money you save, you can put it toward debt repayment and reach your goal of debt freedom sooner.