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 Build an Emergency Fund
When the next financial emergency happens, will you be prepared? That’s the question you should be asking yourself right now. Sure, you can buy all the necessities like food and toilet paper, but another way you can protect yourself financially is by having an emergency fund.
In this article we’ll look at how to build an emergency fund. We’ll cover the importance of having a security net for uncertain times, tips on how to save for one, what the fund should consist of and taking into account how risky or secure your occupation is.
The Importance of Having a Security Net for Uncertain Times
An emergency fund is a lot like insurance. You don’t realize you need it until something bad happens in your life. When that "something bad" does happen, you’ll thank your lucky stars that you have an emergency fund.
At the beginning of 2020, most people were aware of Coronavirus, but didn’t see it as a big threat. This was a virus that was mostly in Europe and Asia. Why should we worry? But this suddenly changed. Fast forward to March of 2020 and many non-essential businesses are closed. This has put a lot of people out of work. Sure, the government may be providing some financial support, but in a lot of cases it’s simply not enough.
In light of COVID-19, many people are now worrying about rent and mortgage payments. Worrying about money is never fun. It’s stressful enough when you’re on your own, but it’s even more stressful when you have a family to take care of. This is where a financial "security net" can come in handy.
A security net, otherwise known as an emergency fund, is savings you put away for a rainy day. These savings are designated to cover any future mishaps and unexpected expenses. In terms of future mishaps, this could be getting laid off from work or being too sick to work. Sure, there’s insurance to protect you, but insurance often only pays you a portion of your regular paycheck; that’s when having an emergency fund can come in handy.
There are also the unexpected expenses. Examples of unexpected expenses include your car breaking down, your roof needing repair from a surprise windstorm or your child needing orthodontics.
Without an adequate emergency fund, you’ll find yourself going into debt to pay for these expenses. If you have to charge these emergency expenses on your credit card, this will only add to your stress level. By having an emergency fund, you could dip into it during times of need and avoid racking up high-interest debt.
Tips on How to Save for an Emergency Fund
My best tip is to save ahead of time for a financial emergency. By the time the next emergency happens, it will be too late. If you don’t already have an emergency fund, start putting some money away today.
How much money should your emergency fund have? It depends on how stable your job is (more on that below). Financial experts recommend keeping between three and six months’ living expenses in a high-interest savings account.
But coming up with three to six months’ living expenses all at once is tough. Luckily, you don’t have to. If you don’t have an emergency fund or you don’t think your emergency fund is sufficient, start saving right away.
Put away whatever money you can afford from each paycheck towards your emergency savings. It may be $200, $100 or even $50, but at least by doing that you’ll be building up an emergency fund over time.
Make your savings automatic. Have it so the money is automatically put into a separate savings account when you’re paid at work. You’ll barely notice the money is gone and you’ll be less likely to be tempted to spend it.
Likewise, set up a separate savings account for your emergency savings. This is a far better approach. Don’t combine it with your savings account for your vacation. The last thing you want to do is deplete your emergency savings account to go on a family trip, only to come back and find your basement flooded at home.
What Your Emergency Fund Should Consist of
Financial emergencies often come up out of the blue. For that reason you want an emergency fund that’s easily accessible. Most people would be well-served by stocking away their emergency savings in a high-interest savings account. Not only can you earn a decent interest rate, the money is easily accessible when you need it most (highly liquid). It’s best to stay away from the stock market for your emergency funds. The last thing you want is for the stock market to crash and the value of your investments to plummet, leaving you with not enough money to take out in an emergency.
What your emergency fund should consist of depends on your income, lifestyle and size of family, among other factors. If your employment situation is unstable, you’ll need a more sizable emergency fund. If you live a lavish lifestyle and don’t want to scale it back when times are tough, you’ll need a larger emergency fund. If you have a big family, you’ll need a larger emergency fund. Are you seeing a trend? You get the picture.
How Risky or Secure Your Occupation Is
Something else to consider when building an emergency fund is how risky or secure your occupation is. In a recession, how secure would your job be? If you’re a full-time permanent salaried employee with the government, you probably have less to worry about than someone working in the hospitality industry. Although even if you work for the government, your job isn’t necessarily 100% secure. A shortfall in the government budget or a change in government could mean you’re out of a job, so it’s always a good idea to plan for the worst and have an emergency fund, even if you think the chances of this happening are slim.
Likewise, if you’re in an industry like hospitality or the airline industry that could be severely impacted by a downturn in the economy, you’ll certainly want to make building an emergency fund a top priority. Your job may be stable right now, but who’s to say it will be stable over the next year, six months or even three months?
How to Build an Emergency Fund: the Bottom Line
Recessions can often happen fast. You may think you have enough time to put money away if you anticipate you could be laid off in the coming months, but sometimes things can happen really quickly with little warning (like the recent Coronavirus pandemic). It’s better to plan ahead rather than being caught off guard the next time a financial emergency happens. Now that we've gone over how to build an emergency fund, you can see that's it's not a complicated task, just one that requires a fair bit of discipline and smart planning.