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!
Understanding Financial Forecasting for Small Business
If you run a small business, you’ll need to get comfortable with finances. Although you may not be a financial guy or gal, like it or not, your small business’s finances are critical to its success. While knowing where your small business stands financially is handy, something else that can help your small business be even more successful is financial forecasting.
In this article we’ll look at the importance and benefits of using financial forecasting for small business. Once you gain a better understanding of what financial forecasting is and why it matters, next we’ll look at the most useful financial forecasting options out there.
The Benefits of Using Financial Forecasting
Financing forecasting for a small business isn’t a requirement, but it’s highly recommended. Unlike big businesses, small businesses don’t have endless financial resources. One bad decision and it can mean the end of a small business. That’s why it’s so critical to accurately forecast a small business’s finances.
Not only do banks require it in order to get financing, it serves as a road-map of sorts to help guide your business into the future and help determine which new business ventures are worth pursuing.
In a nutshell, financial forecasting looks at the current internal information of your small business as well as external economic information. This is then processed through a financial calculation. These financial calculations are critical.
They help figure out how profitable a potential expansion of your small business may be.
The Most Useful Financial Forecasting Options
Now that we’ve explained the importance and benefits of using financial forecasting for small businesses, let’s look at a few of the most useful financial forecasting tools. You can choose to use some of these, all of these or none of these. The choice is yours. Some of these financial forecasting options will be more useful than others depending on the industry you operate in.
1. Cost of Capital
Financial forecasting for cost of capital looks at the interest rates your small business pays on debt or equity financing versus the present or future operations of your business. The capital asset pricing model and weighted average cost of capital are two financial forecasting tools used by small businesses to compare interest rates of financing. These financial forecasting tools use the going rate or market cost of debt and equity (usually prime rate) to figure out if a company should use outside financing or not when deciding whether to accept a new business venture.
2. Net Present Value
The net present financial forecasting determines your small business’s future cash inflows from expansions of your business or new business ventures. Theses cash inflow amounts are then discounted back to the value of money today.
The discount rate you use for your small business is typically a rate of return, figured out in advance, that your company wants to get on any new business ventures your business undertakes. The typical rate used by businesses is between 10 and 12%, although it may be adjusted down based on the industry your business is in and the fact that we’re in a low interest rate environment thanks to COVID-19.
After you add up the amount of the discounted cash flows for your small business, next you compare it to the original cash outflow to start any new business ventures or expand existing operations. If those future cash flows are greater than your small business’ beginning cash outflow, it’s considered a good opportunity worth further investigation.
3. Financial Statement Analysis
This is probably the most basic type of financing forecasting. It’s fairly common for companies to study and compare various financial statements during a set time-frame to figure out if there are any ongoing trends from your small business’s financial information. Examples of trends include higher or lower company sales revenue, the costs of goods or service, and your small business’s expenses found on your income statement.
Companies big and small also make use of financial ratios to analyze their balance sheet and figure out how good of a job they’re doing at earning value from use of their assets. Ratios show how good a job your small business is doing at meeting its short-term financial debts, making a profit from selling goods and service and earning capital from your assets.
4. Decision Forecasting
Although not as common, small businesses sometimes use financial forecasting to make decisions for the business. This is known as decision forecasting. Examples of financial models commonly used include game theory, supply and demand analysis, and decision trees.
To do this type of analysis, as the small business owner, you must look at various decisions you can make with respect to the operation of the business. The potential impact of the various decisions will be clearly spelled out in the forecasting models used.
If you’d like to take this financial forecasting further, you include a percentage for the likelihood of a decision forecast earning a profit. As a small business owner, you can then select the business decision that’s likely to lead to the highest profits.