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 Smart Decisions
What exactly does “living within your means" mean, anyway?
Let’s find out. We’ll take a closer look at the term and how you can better live within your means.
What Does It Mean?
Simply put, “living within your means" involves a person only spending what they make and not a nickel more. Somebody who is living within their means will ensure they don’t overspend and go into debt.
The concept becomes trickier once we think about it a little more. Let’s look at an imaginary person who makes $5,000 per month after taxes. This person spends $3,000 on their fixed expenses and $2,000 every 30 days on designer shoes. We’re talking dozens of pairs each year, all worn a handful of times before being stuffed into the back of some closet.
Technically this person is living within their means. They’re worth nothing outside of whatever the shoe collection is worth, but they’re not going backward. This person is in a good place compared to somebody who has to borrow $50 per month to put food on the table.
Are You Living Within Your Means?
The equation to figure out whether you’re living within your means is ridiculously simple. Even you math haters can handle it.
Income - expenses = >$0
That’s it. Easy, right?
It’s usually pretty easy to tell whether you’re living within your means. If you have no savings, every month you stay above zero is a win. Even if there’s only $5 left at the end of the month. And if you do have a couple of bucks stashed away, the goal is to make sure that balance is going up each month. Or at least you’ll want it to stay the same.
The key to figuring out whether you’re living within your means is knowing what your income and expenses are. Make sure you’re using after-tax dollars for your salary when figuring out your budget. And make sure you tally all your expenses. Things have a way of adding up. It’s a good idea to estimate potential expenses a little on the high side.
How You Can Do It
If you’re currently going backward each month, don’t sweat it. We can help. Here are some ways you can better live within your means.
The first step is to take a look at your expenses. Most people spend more than 50% of their income on just three categories:
- Housing
- Transportation
- Food
These categories are where you’ll want to start. They’ll get you the best bang for your buck when trying to cut expenses.
Take a critical look at what you pay for rent each month. Could you survive in a smaller space? Do you really need that second bedroom? Moving is a lot of work, but it’s worth it to save hundreds of dollars each month. Or, if you don’t want to move, invite a friend to move in and split the rent.
Transportation is another easy category to cut. You might not even need a car if your city has a good public transit system. Moving closer to work can save both housing and transport costs, especially if you end up within walking distance of the office. Or maybe a cheaper car is the answer.
Let’s pivot to food. Most millennials — myself included — spend way too much money eating out. There’s nothing wrong with this, provided you can afford it. If you’re spending too much every month, cutting back on restaurants is an easy way to free up a couple hundred bucks. Saving money on groceries is easy too, provided you meal plan around sale items rather than what you might really want.
Is credit card debt getting you down? Then find ways to get that payment lower. Transfer the balance onto a card with a lower interest rate. Or try to consolidate the debt into something that increases your monthly cash flow — even if that entails paying a little more in the long-term.
Remember the Top Line
Many savers focus on expenses, since they’re the low-hanging fruit. I’d bet even pretty frugal folks can find a few hundred dollars of fat in their spending.
But we shouldn’t forget about the other half of our equation. Income matters too, and there are easy ways to increase that number. And remember, somebody who’s working more will spend less cash on leisure activities.
The easy way to earn more is to sign up for more hours at work. This is especially lucrative if you’re paid hourly. If you’re on salary, then get a side hustle. There are hundreds of things you can do to make a little extra cash, and some of these activities have other positive side effects too. Reffing junior sports will help keep you in shape, for example.
Combine a little extra cash with a little less spending and you’ll get that much closer to living within your means.
Have an Emergency Fund
Many folks can keep themselves afloat on a month-to-month basis, but get into trouble when unexpected expenses come up. A medical emergency or unexpected car repair knocks them into debt, a hole they can never climb out of.
The key is avoiding this in the first place. An emergency fund will allow you to pay for unexpected expenses while keeping your month-to-month cash flow intact. You’d then slowly contribute back to the emergency fund until it’s fully funded again.
Some folks insist on keeping three months’, six months’, or even a year’s expenses inside their emergency fund. I’d start with $1,000 and work up from there.
Even once your emergency fund is full, don’t stop saving. Start putting cash into your retirement accounts or start planning for a new car once the old one wears out.
The Bottom Line
If you’re not currently living within your means, don’t sweat it. By using a combination of cutting expenses and increasing your income, you can get there. It might take drastic moves to cut down your lifestyle, but you’ll feel great once you start making financial progress each month.
An emergency fund will also help with those unexpected expenses, annoying things that pop up at the worst times.
Life is better lived without financial stress. You can get there. It’ll be worth all the sacrifice.