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!
Ready to go House Hunting?
You’ve decided you’d like to buy a home, but you can’t afford to pay for it in cash. That’s no problem. A mortgage can help you get the home of your dreams. Getting a mortgage can seem like a daunting task, but it doesn’t have to be. In this article we’ll tell you everything you need to know about getting a mortgage.
How Much of a Down Payment Do You Need?
A down payment is the money you pay ahead of time in order to get a mortgage. It’s subtracted from your mortgage loan and represents your home equity at the beginning.
Lenders usually prefer that you make a 20% down payment; however, as a first-time homebuyer, that can be a daunting task. Thankfully, you can buy a home with a much smaller down payment — in fact, as little as 3.5%.
The Federal Housing Administration (FHA) is a government agency that helps homebuyers get approved for mortgages. It accomplishes that by guaranteeing part of the mortgage loan. This is how you’re able to only put down 3.5% and possibly still get the lowest mortgage rates available.
If you’re putting down less than 20% on a property, most lenders usually require that you purchase private mortgage insurance (PMI). No, this isn’t insurance that protects you — it’s insurance that protects your mortgage lender in the event that you fail to repay your mortgage. PMI gets added on top of your mortgage and represents an added cost for homebuyers, so be sure to factor in its cost if you’re putting down less than 20%.
Making a down payment of 20% on a property does have its advantages if you can afford it. In this case, you won’t need to buy PMI, plus you may get more favorable mortgage terms, including a lower mortgage rate.
Don’t make the mistake of putting every penny toward your down payment. It’s important to set some money aside for closing costs. These are the expenses that you’re required to pay out of pocket when buying a home. Examples include a home inspection fee, land transfer tax, real estate lawyer fees and moving expenses.
How to Get Pre-Approved
Before you start looking at properties, it’s a good idea to get pre-approved for a mortgage. A pre-approval involves a lender looking at your income, assets and credit, and confirming the maximum purchase price you can afford to spend on a home.
It’s important to note that a pre-approval isn’t a guarantee that you’ll get a mortgage. Although a mortgage pre-approval is helpful in the sense that you’re more likely to only look at homes within your price range, the missing piece of the puzzle is the property itself. If the lender doesn’t like the property for whatever reason, it could turn down your mortgage approval.
Now that you have a better understanding of what a mortgage pre-approval is and what it isn’t, let’s take a closer look at how to get pre-approved.
When getting pre-approved for a mortgage, your finances are basically an open book for your bank. Your bank will ask you for various documents to verify who you are and that your finances are in order (more on this below).
Once you’ve submitted the documents to the lender, it usually takes about two to four weeks to get pre-approved. Once you’re pre-approved, the lender will usually provide you with something in writing. Once you have this in hand, you can confidently go out and start looking at properties.
What Information/Items Do You Beed Before Meeting with a Mortgage Broker?
Whether you’re getting pre-approved for a mortgage at the bank or through a mortgage broker (someone who acts as an intermediary between homebuyers and lenders), it’s important to come prepared. Here are some of the information/items you’ll need before meeting with the bank or a mortgage broker:
- Personal Information: A mortgage represents a large sum of money. To verify your identity and make sure you are who you say you are, your mortgage broker will most likely ask you for personal information such as your date of birth and government issued photo identification. You may be asked for your social security number (SSN) so your mortgage broker can do a credit check.
- Employment Documentation: If you’re a salaried employee, your mortgage broker will usually ask you for a letter of employment, most recent pay stubs and W-2s for the last two years. If you have any other sources of income like a side hustle, you may be asked for additional income documentation.
- Asset Information: To ensure you’re a responsible borrower, the lender will most likely want to see information on your assets. Assets are things that you own. Examples of assets include investments, vehicles and any other properties you might own.
- Down Payment: Related to your assets, the lender will want to know the source of your down payment. As such, you’ll likely need to supply financial statements for the last 30 to 90 days. If you’re receiving money as a gift toward your down payment, you might be asked to come with a gift letter as well.
What Options Are There for Mortgages: Pros and Cons
Once you’ve found a home that you like, you’ve made an offer and it’s accepted, it’s time to get a mortgage approval from a lender. There are two main types of mortgages: conventional mortgages and FHA mortgages.
A conventional mortgage is when you’re making a down payment of at least 20%. Conventional mortgages come in two main varieties: fixed rate and adjustable rate.
Fixed rate is, as the name implies, when your mortgage rate stays the same for the length of your mortgage term. So, if you have a 30-year fixed rate mortgage, your mortgage rate and payment will stay the same for 30 years.
A variation of that is the adjustable rate mortgage. With the adjustable rate mortgage, your mortgage rate and payment may change during the life of your mortgage. The advantage of this is that if interest rates were to fall, you’d pay less by way of your mortgage; but if rates were to rise, you’d pay more. Before taking an adjustable rate mortgage, it’s important to make sure you’re okay with this added risk.
An FHA mortgage is one that’s backstopped by the government. With an FHA mortgage, you can make a down payment of as little as 3.5%, making it a lot more affordable for first-time homebuyers to get into the real estate market.
How to Find a Mortgage That Fits Your Needs/Resources/Lifestyle
There isn’t a one-size-fits-all mortgage for everyone. The reality of the situation is that everyone’s finances are different. What may work for your neighbor may not work for you.
If you’re someone who’s risk adverse or a first-time homebuyer, you’re probably better off sticking with a fixed rate mortgage. That way you’ll know exactly what your mortgage payments will be, making it a lot easier to budget. If you’re someone who’s less risk adverse, you might consider an adjustable rate mortgage.
The bottom line is that you want to choose a mortgage that fits your needs, resources and lifestyle.