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!
How to Save for Retirement without a 401(k)
401(k) plans make saving for retirement a lot easier and more convenient. The money is automatically set aside from your paycheck before you’re tempted to spend it. You also benefit from an immediate tax break. Your employer may even match your contributions if you’re lucky. But what if you’re not so lucky and don’t have a 401(k) plan?
The good news is that saving for retirement without a 401(k) plan is still possible. You’ll just have to put in a little more effort. But if you’re willing to put in that effort, it will pay off in spades by helping you save toward a comfortable retirement.
In this article we’re going to look at how someone can save for retirement without a 401(k) plan. We’ll look at what other savings options are available, pros and cons, what to look for and more.
Here are some other ways to save for retirement if you don’t have a 401(k) plan.
IRA
If you don’t have a 401(k) plan, your next best alternative is an IRA. IRAs come in two varieties: a traditional IRA and a Roth IRA. Both accounts work in similar ways with the main difference regarding how they’re taxed.
When you contribute to a traditional IRA, your contributions are tax-deductible up front.
Your money is able to grow tax-free until you’re ready to start making withdrawals in retirement. It’s at that point that you will finally pay income tax. Roth IRAs are the complete opposite: you’re taxed on the contributions you make up front, but you aren’t required to pay tax on any withdrawals you make in retirement.
Another key difference is the amount you can contribute to both. For traditional IRAs, you can contribute up to $6,000 annually ($7,000 if you’re at least 50 years old). With Roth IRAs, the amount you can contribute depends on your annual income. If you have a high household income, you may not even be eligible to contribute to a Roth IRA.
One of the main benefits of 401(k) plans is the ability to set up direct deposit with your employer. The good news is that there’s nothing stopping you from doing the same with IRAs.
If your employer doesn’t allow you to automatically contribute to an IRA from your paycheck, you can set it up so that you automatically contribute to your IRA from your checking account a day or two after your paycheck is deposited into your bank account.
If you’re having trouble funding your IRA, you can contribute some or all of your tax refund from the IRS to your IRA. That’s right, by completing a tax form with the government your tax refund could be automatically deposited directly into your IRA, helping you reach your retirement savings goal sooner.
Other Saving Options
If the IRA isn’t your cup of tea, here are a couple other savings options that are available.
Saving Accounts
Everyone needs emergency savings. If you’d like to earmark money toward retirement, but you’re afraid you might need it again soon, you might consider putting it in a savings account.
A savings account is a lot more accessible than an IRA. You can withdraw the money whenever you need it, but this can be a double-edged sword. You could find that you’re constantly using the money that you’re supposed to be saving for retirement for other purposes. To avoid a situation like this, it’s best to only keep a minimum amount of funds in your savings account.
Certificates of Deposit
Another savings option worth considering is certificates of deposit (CDs). CDs are a lot like savings account in the sense that they offer a similar interest rate and the government insures them. The main difference is that your money is locked-in for a specific period.
CDs may be as short as three months or as long as 10 years. If you’re saving for retirement, it’s probably a good idea to go with a longer-term CD, but at least you have the option of choosing a CD with the term that fits you best.
How Much Should I Save to Reach My Retirement Goals?
That’s a great question and it really all depends on when you’re planning to retire. All things considered equal, the sooner you start saving for retirement, the less money you’ll need to save. Similarly, the sooner you plan to retire, the more aggressively you’ll need to save. Unfortunately, there’s no magic number for everyone. Fortunately, doing the math isn’t too tough.
Start by figuring out when your ideal retirement date is. Once you have a goal in terms of when you’d like to retire, figure out the lifestyle you’d like in retirement. For example, are you okay with playing bridge on your front porch or do you want to go on cruises and travel the world?
Once you have your dream retirement in mind, try to put a price tag on it. Figure out how much you expect to spend in retirement. It can help to create a mock budget. Once you have your mock budget in hand, you can figure out how much you’d need to save from each paycheck in order to achieve your desired retirement date. It’s that easy.
Saving within Your Means
How much you need to save depends on the lifestyle you want for when you’re retired. If you plan to travel down south to Florida during the winter and travel to exotic locations during the summer, chances are your retirement is going to be pretty pricey.
It’s a good idea to ask yourself if you can truly afford a lifestyle like that in retirement because this will dictate how much you need to save during your working years.
A good rule of thumb is to aim to save between 10 and 15% of your paycheck beginning in your 20s. If you start saving later in life, you’ll probably want to up the percentage of your savings depending on the lifestyle you want to live in retirement.
If you’re finding your expenses are going to be too high once you’re retired, you might consider downsizing your home or scaling back your retirement plans. By doing that, you won’t need to save as much during your working years.