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 Structure Your Business
When you launch your business, you face many decisions, but none is more important than how you structure your company. If you alone are the business owner, you can set the company up as a sole proprietorship with minimum preparation.
If you and at least one other person are owners, you can create a partnership structure. Both are unincorporated, pass-through structures and therefore pay no corporate income tax. The IRS considers a sole proprietorship and a partnership as no different from the individual owner(s). However, limited liability structures are available for those who want to establish a separate entity, and we’ll touch on this at the end of the article.
Read on to learn the pros and cons of setting a company up as sole proprietor vs partnership.
Sole Proprietorship
In a sole proprietorship, the owner runs the business, without partners (other than a spouse). You can start a sole proprietorship without filing any papers or taking any legal steps. However, your local government might require you to secure a business license and permits to operate.
For example, if you started business as a plumber or electrician, you would probably need to obtain the proper license. You have the option to Do Business As (DBA) a trade name, which is easy to do online. But a DBA doesn’t separate the owner from the business.
As the owner, you are personally liable for all debts and tax payments. In fact, the IRS considers your sole proprietorship to be a disregarded entity, and you file your business income and losses as part of your personal return. The business files no separate tax return. In other words, the sole proprietorship is a pass-through entity because income, expenses and the obligation to pay taxes flow directly to you, the owner.
You must pay self-employment taxes (for Social Security and Medicare) as part of your quarterly estimated payments to the IRS. The sole proprietorship provides your personal assets no protection from liabilities arising from debts, legal actions and other causes.
You can dissolve a sole proprietorship any time by informing the federal, state and local taxing authorities that you no longer run the business. As the sole proprietor, you have exclusive control over how you run the business. You make the management decisions, and when you die, the company dies with you.
Sole Proprietorship Pros and Cons
The advantages of a sole proprietorship are:
- It’s easy and quick to launch, with few, if any, forms to complete.
You have total control over the business, including all the money earned by the business.
- As the sole manager, you can quickly respond to problems and opportunities.
- You have less involvement with the government, and you don’t have to keep any special incorporation records or minutes of annual meetings.
You don’t file a separate tax return and you don’t have to prepare financial reports such as a balance sheet.
The disadvantages of a sole proprietorship are:
- The business owner is liable for all business obligations and debts. The liability extends to your personal assets (except for a 401(k) and, partially, an IRA). You may need to secure additional insurance coverage against physical loss or personal injury.
- If the owner dies, becomes incapacitated or physically impaired, the business may have to terminate.
- It can be difficult to raise financing because the owner has fewer assets.
- You call all the shots, which means you could make a bad decision that kills or hurts the company.
- Your business might seem less professional than do other company structures.
Partnerships
A partnership is a business owned by two or more individuals. To establish one, you first register the partnership with your local Secretary of State. You must also give the business a name or use a partnership name consisting of the partners’ last names. You can also register a DBA if you want to operate under a different name.
You then obtain any necessary permits and licenses. These vary by state, locality and industry. You might also create a partnership agreement, which although not legally required, is a good idea. A partnership agreement lays out the responsibilities of each partner, how decisions are made, how profits are divided, how disputes are resolved, and how to change or dissolve the partnership.
Like a sole proprietorship, a partnership is a pass-through entity that pays no income taxes on its own. However, the IRS requires partnerships to annually file Form 1065, which reports the partnership’s income, gains, losses, credits, deductions and so forth.
Partnership Pros and Cons
The advantages of a partnership are:
- The company can survive the death or departure of a partner.
- It can be easier to raise financing because multiple owners have a greater number of assets.
- Decision-making is shared, meaning that mistakes might not be attributed to a single person.
- Your business will appear more professional.
The disadvantages of a partnership are:
- It requires more paperwork to establish a partnership and report annually to the IRS.
- The partners are liable for all business obligations and debts. The liability extends to their personal assets. This can make it harder to secure loans or attract investors.
- Control is shared among the partners, which can slow down decision-making.
- It can take longer to respond to opportunities and challenges.
- You face more government involvement.
- You must file an annual tax information.
Limited Liability Alternatives
A sole proprietor can limit personal liability by setting up a Limited Liability Company (LLC), a Chapter S corporation or Chapter C corporation. An LLC is a pass-through entity for tax purposes. It is set up as a sole proprietorship if there is only one owner. Otherwise, it is treated as a partnership. A Chapter S corporation is also a pass-through entity, but a Chapter C corporation files its own return and pays income taxes on its profits.
Partnerships can obtain liability protection by structuring themselves as limited partnerships or limited liability partnerships. In a limited partnership, the general partners have 100% liability for the company, but limited partners are liable for only their capital contributions. In a limited liability partnership, all partners have limited liability.