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 Pay Federal Taxes Online
The U.S. government taxes its citizens’ and permanent residents’ income. That means that every dollar you earn is essentially reduced by a certain percentage because the federal government takes a portion of it. The percentage rate they take depends on how much money you make. Generally, as your income increases, the percentage of tax that you must pay also increases.
Federal taxes are used to fund various national programs. Income taxes are the federal government’s primary source of revenue. It pays for things like Social Security, Medicare and Medicaid. Other social welfare programs like housing assistance and temporary assistance for families in need are also funded through tax revenues. Taxes also cover things like military costs for defense and education.
Now, you might be asking, “How do I pay federal taxes online?” Keep reading to learn more.
Do I Need to Pay Federal Taxes?
While not everyone is required to file a tax return, most do because they can get tax money returned to them that has been withheld from their paychecks throughout the year, even if they do not owe any additional tax. If you are employed in a traditional W2 job, like most salary and hourly wage positions, your income taxes are generally paid for you by your employer.
By preparing and filing your tax return, you are often asking for your money back because your employer withheld too much; that’s why it’s called a “tax refund.” In fact, nearly 112 million people received tax refunds in 2018. This statistic indicates that most people have already paid all their taxes (and then some) by the end of 2018.
You will only have to pay federal taxes if your employer did not withhold enough funds to cover the taxes you owe. That means you only have to worry about paying your federal taxes online if you owe money to the Internal Revenue Service (IRS) after you prepare your taxes.
How to Pay Federal Taxes Online
Because the IRS is very interested in you paying any taxes that you owe based on your income, they try to make the payment process easy. You can always send in a check to the IRS for the amount you owe, but paying online is often faster and easier. Online payment options are based on how you pay.
Use the IRS’s Direct Pay
Direct Pay allows you to make income tax payments after your taxes have been prepared by using a checking or savings account. You can go to the Direct Pay website and simply click “Make a Payment.” From there, you input information about the payment, such as why you are making it, how you want it applied, and which tax period you are paying. It will also ask for various pieces of identifying information to ensure your payment is credited to your account correctly.
Use a Credit or Debit Card
The IRS also accepts credit or debit card payments online. However, you must use a specific e-filing service to take advantage of this payment option, such as through TurboTax or FileYourTaxes.com. You will also be charged a convenience fee to make a payment using this method.
Create an Installment Agreement
You can also work with the IRS to create an installment payment plan that can be paid online through Direct Pay. The IRS has an Online Payment Agreement tool you can use to see if you qualify to make payments on your tax obligations. It will also walk you through how to make these payments once your payment plan is approved and processed.
How Do I Know How Much to Pay?
Unfortunately, you cannot simply pay the IRS whatever you want, and they generally will not send you a bill (unless you are behind on filing your taxes and they have estimated your tax obligations, along with penalties and interest). Instead, you need to go through the work of preparing your tax return yourself or having a professional complete your return. Only then will you know how much tax you owe.
You can sometimes estimate your tax obligations if you know basic information, such as:
- Your income
- Whether you will take the standard deduction or use an itemized deduction
- Any other deductions you would qualify to receive
- Any credits you are entitled to get
- Any adjustments to your income that should be considered
For example, if you know you have a salary of $50,000, you are a single person, you will take the standard deduction, and that you are not entitled to any deductions or credits, estimating your tax obligations is fairly straightforward. However, if your tax situation is more complicated, you likely will not know how much you owe until you explore all of your deductions and credits and take every adjustment you can.
Income taxes use the following tax brackets and rates for 2019. These rates are periodically adjusted, so they may vary from year to year.
The example above included a single person earning $50,000 who uses the standard deduction. If they have no credits, additional deductions or adjustments, then their taxable income is $38,000. That puts them in the 12% tax bracket rather than the 22% tax bracket.
Those deductions are important because they can lower your tax obligations, so use them to your full advantage. Without the standard deduction in our example, the taxpayer would have had to pay $11,000 in taxes, but the standard deduction means they only have to pay $4,560.
The amount you pay at the end of the tax year is also offset by the payments you have made throughout the year, usually through your employer. You need to check your W2 to see how much those payments have been under most circumstances.
Keeping Good Records of Tax Payments
When you make any kind of tax payment, you should keep a record of it (receipt or otherwise). If you write a check, keep the carbon copy. If you make an online payment using Direct Pay or by credit card, keep the receipt that the IRS provides to you. The IRS recommends that you keep some records forever, but you should retain most records for at least three years.
However, the IRS has six years to dispute the amount you have paid or to make a claim that you have not paid. As a result, it is a good idea to keep all your tax payment records for seven years. That way, you can prove to the IRS that you made the payment even if they applied the payment incorrectly, or a different error occurred.
Many people have already paid their taxes throughout the year and only file their tax return to get their refund. However, when you owe taxes, paying online may be a good idea. Be sure to go through the process of preparing your tax return first so you know how much you should pay. Once you have made a payment, keep a record of the payment so you can prove that you made the payment later if necessary.