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!
It's All About Your Credit
Having a low-interest credit card is part of a life well-lived. For those who have them, it means the ability to finance purchases cheaply. For those who want them, it’s the reward for building (or rebuilding) excellent credit.
Read on to learn about low-interest credit cards and how to get one.
What Is a Low-Interest Credit Card?
Credit card interest rates are expressed as an annual percentage rate (APR). This is a compound interest rate that may also include fees that are not separately charged. You pay interest on credit card balances that you don’t fully repay within the grace period, which extends a few weeks beyond the end of the monthly billing cycle — for purchases.
Cash advances, which may have a different APR, have no grace periods. The point of APR is that it enables you to directly compare credit cards to one another.
Types of Low-Interest Credit Cards
In a nutshell, low-interest credit cards include:
- Cards for those with excellent credit. This is usually defined as a FICO credit score above 800 on the 300-850 range.
- Cards that are designed for students. Many students have no credit history and therefore have low credit scores. Student credit cards give their owners a break, perhaps in the hope that the student will continue to hold the card after graduation.
- Business credit cards. However, the business (and/or its owners) should have good-to-excellent credit to qualify for a low rate.
- Secured credit cards. The card owner posts collateral in the form of a cash deposit in a bank account. The card issuer can access the cash if a payment is late or less than the required minimum. The interest rate is lower than that of an unsecured card because the collateral reduces the issuer’s risk of loss.
- Cards with introductory offers. This is any card that, at least temporarily, offers an introductory APR of 0%.
Average APRs for Different Credit Types
Typically, credit card APRs range from the low double digits to about 30%. A source puts 2019’s average APR on all new accounts at just above 19%, but those with excellent credit can currently get an APR of around 14% on average.
APRs for the remaining score categories (good, fair and poor) all average more than 20%. However, credit cards for students and businesses average between 17.5% and 18.5%. Secured cards charge just below 19%, on average.
APRs reflect current economic conditions, including the Fed Funds Rate and the margins that card issuers charge. During the Great Recession, APRs were about two to three percentage points lower, and have been rising ever since.
Introductory APRs
If today’s APRs seem a little steep, perhaps you’d be interested in a 0% APR. That’s not far-fetched at all. Rather, it’s a commonplace introductory rate that many credit cards offer. If you have average or better credit, you can easily obtain a card with a 0% introductory offer that extends from six to 18 months. The rate applies to purchases and, usually, to balance transfers. However, cash advances aren’t invited to this party.
Once the introductory period expires, the card reverts to its regular APR. For many, that’s the cue to replace the card with another and thereby enter a new introductory period.
If you have a large balance on your card at the end of the introductory period, you might choose a new card that offers 0% interest on balance transfers as part of its introductory offer. However, you’ll likely have to pay a fee around 3% for each transfer.
Never Pay Interest
It’s simple to get a permanent 0% APR credit card. Just pay your balance each month within the grace period. The card issuer might hate you for it, but you’ll avoid paying even a penny on interest. If you pick a card with no annual fee, you pay nothing at all for using your card (except for cash advances, which always charge interest).
Of course, the key is discipline: don’t charge more than you can pay for within the next few weeks. This makes your card a convenient alternative to writing a check or using a debit card, but you forego the ability to finance your purchases for more than a few weeks.
Pros and Cons of Low-Interest Credit Cards
On the plus side:
- You save money on purchases and balance transfers by paying less interest on balances you carry forward more than a month. This leaves you more money to use elsewhere.
- They help you pay your debts faster (thought use this credit card calculator before making any decisions).
- Great way to finance big-ticket purchases.
- Source of less-expensive emergency cash when you need it.
- Cards for those with excellent credit often have great benefits and rewards (cash back, points or miles).
Are there any downside to low-interest credit cards? The following might be possible:
- You might feel encouraged to overspend and end up digging yourself into a debt hole.
- Some low-interest cards charge high annual fees.
- More expensive than some alternative forms of credit.
However, if you choose a card with a 0% annual fee and control your spending impulses, you are ahead of the game. Some folks object to the use of any credit cards, but that’s a different discussion.
Who Benefits from a Low-Interest Card?
As we’ve established, there is very little downside to owning a low-interest credit card, if you can qualify for one. Those who benefit the most are folks who regularly spread out their repayments over several months. The ability to finance a purchase comes in handy when you are planning an expensive vacation, a wedding, a big-ticket purchase, etc.
Keep in mind, even a low-interest card, with an average APR of 14%, represents expensive credit compared to some alternatives. You might pay considerably less interest on a home equity line of credit or a personal loan.
How to Get a Low-Interest Credit Card
- To qualify for a low-interest card, you should establish an excellent credit score. That means paying your bills on time, making more than the minimum payment and utilizing only a portion of the credit available to you. It also means avoiding bankruptcy, foreclosure, defaults and collections.
- If you are rebuilding your credit, consider a secured card, which will come with a slightly lower APR than its unsecured counterpart, albeit with a lower credit limit.
- If you don’t mind rotating through a new credit card every six to 18 months, you can get cards with an introductory 0% APR.
- Finally, if you avoid unpaid balances, any card becomes a de facto 0% APR card. Unless you have some overriding reason to get a card that requires an annual fee, choose a no-fee card.