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!
Making a Profit Is the Next Step After You Break Even
The whole point of being in business is to make a profit. But sometimes, especially when you’re first starting out, that isn’t always possible. The secret to staying in business is to first stem your losses. Ideally, you’ll want to turn that loss into a profit, but first you’ll have to break even.
This isn’t as simple as you’d think. In this article, we’ll go over the break even point formula so you can figure out how to turn a profit with your business.
How to Calculate a Break Even Point
The break even point occurs when a business makes enough revenue to cover their costs. Note that a profit hasn’t been made at this point, but it’s usually the next step.
How do you figure out this number for your business?
First, you must add up all your fixed expenses. Typical fixed expenses might include:
- Rent
- Utilities
- Staff wages
- Equipment costs
- Loan payments
- Insurance
- Depreciation
- Manager salaries
- Advertising
Next, it’s time to look at variable expenses. These tend to fluctuate with the number of units sold. Note that most of the time production costs per unit will decrease as more product is produced.
Typical variable expenses will be:
- Cost of raw materials
- Labor to put the product together
- Travel
- Marketing and promotion
You’ll notice that advertising is in the fixed cost category, while marketing and promotions are variable costs. All three can be variable costs. Advertising is usually easy to cut when times are bad. However, a business should never abandon marketing completely, or else it could start a death spiral of epic proportions.
Entrepreneurs should note that fixed costs will mostly stay the same, whether your business produces one unit or 100. This is why it’s important to keep those expenses as low as possible when you’re first starting out.
Say I want to make coffee tables. My fixed costs are $5,000 per month for the shop, my staff, and so on. If I only make one coffee table, that piece of furniture will need to sell for $5,000 plus the cost to produce the item in order for me to break even. If it costs $500 to make one unit, I have to sell it for $5,500 to break even.
That’s obviously not a viable business plan.
But what if I make 50 coffee tables per month? This brings down my break-even point to $600 per unit: $100 per table in fixed costs and $500 per piece in variable costs. If I can sell each one for more than $600, I’ve done even better; I’ve made a profit.
There’s just one problem. Figuring out my costs is relatively easy. All I need to do is come up with a business budget and stick to it. But how does a business owner accurately forecast revenue? This is the tricky part of a break even formula.
Forecasting Sales Will Help You Stay Afloat
The bane of every good break even point formula is when sales start to falter. This increases your fixed costs per unit and can throw your whole business into chaos.
Figuring out your top line is notoriously tough, especially for new entrepreneurs. How can one forecast sales when there’s no data to back anything up? It’s basically a wild guess.
The first tip I’d give new business owners is to be conservative. Build your business to be able to withstand lower than expected revenue, especially in the first few months of operations. Take your first three months’ worth of sales expectations and slash them in half, then build your business accordingly.
This is when doing your market research is important. Find out how many sales your competition expects in a typical week. Surpassing your rivals is a reasonable (and motivating) long-term goal, but don’t expect it to happen right away. Happy customers aren’t going to stampede over to your new product even if you give them a compelling reason to switch. It’s a process that takes time.
Another way to get an idea of your potential sales expectations is to research a competitor operating in another city, in a market that has similar characteristics to your home. You’d be surprised how much employees will tell you if you make a visit and start asking questions. After all, you’re not much of a threat.
Some entrepreneurs find value in having two sets of sales projections. One is a conservative measure, while the other takes a more aggressive approach. Since business can go up and down seemingly randomly, switching from one forecast model to the other can keep a business owner sane.
One last piece of advice is to make sure you have enough start-up capital to endure worse than expected conditions. If business takes off, you can always invest that excess cash into expanding operations. And if it doesn’t, your business can survive while you figure out the next step.
Getting Back on Track
What should you do if sales aren’t quite up to expectations?
This sounds counterintuitive, but the first step should often be spending more money. A good marketing campaign at the right time can save a business. Many new ventures panic and cut their advertising spending, which decreases new revenue sources.
One of the most difficult decisions for a struggling entrepreneur to make is whether more capital should be injected into a money-losing business. The time to make this decision isn’t when the owner is panicking. This decision should have been made months beforehand, when calmer heads ruled the day.
Further to this, have additional sources of capital lined up before you need them. It’ll be a lot less stressful this way.
Falling into money-losing mode is also a great time to look at your fixed expenses. Perhaps a staff member isn’t working out, or the company has too much space. These might be big changes, but they could literally be life or death decisions for your organization.
A riskier move is to try raising your prices. Many first-time entrepreneurs are convinced undercutting the competition is their ticket to success. This often backfires, especially when they don’t have a low-cost business model. Besides, customers will often conclude something is wrong with a discount version of the same product.
The Bottom Line
Your business needs to do a break even analysis before it even opens its doors for the first time. Yes, it really is that important. Opening a new venture is hard enough. The last thing you want to do is put more of your hard-earned capital into it.