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!
Saving up for Your Dream House
If you want your dream of becoming a homeowner to be reality someday you’ll need to do some careful planning. In this article we’ll look at how to go about saving money for a house. We’ll look at figuring out what fits your lifestyle and what type of account you should use.
How Much Money Do You Need for a Down Payment?
How much money you need for a down payment largely comes down to the real estate market you’re buying in. In pricey real estate markets like New York City or Los Angeles, you’ll need to come up with a heftier down payment (in dollar amounts) since the home prices tend to be higher in these markets. Likewise, the size of your down payment depends on the property type you’re buying. For example, condos and townhomes tend to be more affordable than houses, all else constant.
Once you figure out where and what you’re buying, you’ll need to figure out how much you’d like to save for your down payment. If you’ll be taking out a mortgage, most lenders usually like you to make a 20% down payment. However, if you’re a first-time homebuyer, you may be able to make a down payment as low as 3.5% (bear in mind that you’ll typically need to pay for private mortgage insurance if you’re making a down payment under 20%, adding to your monthly carrying costs).
Although there’s no right number for the size of your down payment, a good rule of thumb is to aim for a 20% down payment in more affordable real estate markets and a 10% down payment in more expensive real estate markets. That way if there’s a correction in the real estate market, you have some extra equity as buffer and you’re less likely to find yourself underwater (i.e. with more mortgage debt than your property is worth).
How Do You Figure out What Fits Within Your Lifestyle?
As mentioned earlier, a key decision about buying a home is the property itself. Ideally, you don’t want to be moving every couple years. Not only is it disruptive, you’ll be paying the soft costs of real estate over and over again. For that reason, you want to buy a property that fits within your lifestyle.
That all starts by asking yourself the question, what property type am I best suited for? For example, if you’re a busy professional, you may be better suited for the condo lifestyle. With a condo you don’t need to worry about mowing the lawn or shoveling the snow. Your monthly maintenance fees will cover those, making condos a relatively low maintenance property.
On the other hand, if you have children or pets, a house with a backyard may be an attractive option. Your kids and dogs tend to have plenty of room to play. In addition, backyards are great for entertaining and barbecues.
If you’re looking for a happy medium, you might consider a townhome. A townhome has the best of both worlds. You get more space than a condo, but less responsibility than a house. It’s a win-win for a lot of homebuyers.
By figuring out the property type, you can start looking at properties in your ideal area and determine how much of a down payment you need to save.
What Type of Account Should You Use?
Generally speaking, you’re better off using a savings account to save money for a house. A savings account provides a safe place to sock away your money and let it grow until you’re ready to use it toward the purchase of a home. You’ll want to take the time to shop around for a savings account that offers a decent interest rate to help your money grow even faster.
Unless you’re going to be saving for five years or longer, mutual funds usually don’t make sense when saving for a home. Mutual funds tend to be more volatile. You wouldn’t want to see half your down payment money vanish because the stock market takes a nosedive before your property’s closing date, leaving you with a huge shortfall.
Another place you might consider saving your money for a down payment is certificates of deposit (CDs). CDs are a time deposit sold by most banks and credit unions. CDs work a lot like savings accounts in the sense that your money is fully protected. Since your money is locked-in, CDs encourage you to be more financially disciplined, making them ideal for those struggling to save. CDs tend to offer an interest rate as good as, if not better than, savings accounts.
Determining a Timeline
Determining a timeline to save for a house comes down to your own personal needs and your income. For example, if your parents would like you to move out from home in a couple years, that will be how long you have to save for a down payment.
Your income is also an important determining factor. All things considered equal, the higher your income, the less time it will take you to save for a house. Although finding a higher paying job is easier said than done, if you’re struggling to save, creating a budget is a good exercise.
A budget can reveal areas of your spending where you can tighten your belt and save even more. For example, if you could cut 10% off your food and transportation costs, that might mean an extra $50 or $100 per month to save toward the purchase of a house.
Sometimes you can set your own timeline for buying a house. For example if you’re renting, you don’t really have a timeline for buying a house. That being said, it’s a good idea to create your own timeline. If you don’t have a timeline, you might never feel there’s an urgency to save.
Let’s say you want to buy a home in three years. Figure out how much of a down payment you’ll need to save. For example, if you need to save a $50,000 down payment, figure out how much money from each paycheck you’ll need to save to reach that goal, then set it up so the money is automatically set aside in a savings account. That way the money is out of sight, out of mind and you’re not tempted to spend it.