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!
What Is a Corporation?
When starting your own business, you will need to determine how you want to legally structure your company.
Sole Proprietor versus Corporation
When starting out, many businesses are sole proprietorships or partnerships, depending on the number of business owners. A sole proprietorship is a business that is owned by one person.
Starting a sole proprietorship is fairly easy. Most businesses in America fall under sole proprietorships.
This is where a corporation differs. Incorporating a business will require a lot of paperwork and consideration.
Advantages of Incorporation
Limited Liability
The main reason to incorporate is to protect the business owner's personal assets.
As a sole proprietor, you and your business are considered one and the same. If someone sues your business, your business and personal finances are at risk. You might have to use your own money and possibly sell your home to pay any business bills.
Registering your business will help separate yourself from the business' debts and financial obligations, hence providing you limited liability.
Ease of Ownership Transfer
Incorporating your business will make it easier to sell your business in the future.
A sole proprietorship will normally stay and die with its one shareholder. As its own legal entity, ownership of the business can easily be moved to someone else.
This flexibility will help you raise capital by selling interests (shares) of the company. Eventually, you could even sell the entire business to another party through an acquisition.
Some Tax Advantages
As a corporation, you can benefit from additional tax savings. Corporate tax benefits include:
- Savings on self-employment taxes:Not all profit is subject to the U.S. self-employment tax (roughly 15.3%)
- Lower corporation taxation rates (21%)
Disadvantages of Incorporation
Additional Administrative Work
Incorporating your business will require additional administrative overhead and effort.
The level of management required depends on the type of corporation you choose. At a minimum, registering a business will require:
- Choosing which state to incorporate in
- Filling out the required documents
- Paying business registration and maintenance fees
- Filing a business tax return annually
Double Taxation
As a larger corporation, you will most likely face double taxation on profits. Double taxation is when the same amount of money is taxed twice.
For example, C-Corporations will pay income tax as a company. Then you, as a business owner and shareholder, will most likely take out money to pay yourself. The income you receive from the company will then be taxed at your personal tax return.
This double taxation can be avoided by using a "pass-through entity." This means that profits will always be passed through the company and onto the shareholders. The company, therefore, will not pay any income tax.
Types of Corporations
Limited Liability Corporation (LLC)
What is it? An LLC is often used as the first legal structure a new business will form. It offers limited liability (protection of personal assets) as a separate legal structure from the business owners.
Pros: LLCs offer legal protection for owners and are often easier to set up and maintain. Tax-wise, the IRS is flexible with how an LLC is taxed. It can be set up as any of the following three categories:
- A sole proprietorship: taxed at the individual level and subject to self-employment tax
- S-Corp: taxed at the individual level and not subject to self-employment tax
- C-Corp: taxed at the company and individual level
Cons: This legal structure can only be in place for a limited amount of time. Many states restrict the time limit to a maximum of 30 years.
LLCs are NOT corporations, therefore there is no stock ownership structure. A stock ownership structure is required to sell an interest in the company to future investors. This, therefore, makes it harder to raise capital or sell ownership.
S-Corporation (S-Corp)
What is it? An S-Corporation is not an actual business entity structure. It is a way to classify your corporation to the IRS.
Pros: Having an S-Corp helps lower the tax burden for business owners. With an S-Corp, income is passed through the company directly to its shareholders (owners) as salary and profits. This means no double taxation. Secondly, business owners with an S-Corp can avoid the 15.3% self-employment tax as well.
Cons: "S" stands for small and is, therefore, more fit for smaller companies. S-Corps have many restrictions including:
- It must be a U.S. company
- It cannot have non-U.S. citizen or resident owners
- It cannot have more than 100 shareholders
More IRS restrictions can be found here.
C-Corporation (C-Corp)/Incorporated Companies (Inc.)
What is it?
A C-Corporation is essentially the next level up from an LLC, allowing stock ownership structure. Being incorporated (Inc.) refers to the C-Corporation Structure.
Pros: This legal structure is mainly for larger corporations, which can make your business look more credible. By allowing a stock ownership structure (which means you can give out shares of ownership of the company), you will have an easier time looking for investment.
Cons: Corporations require a stricter management structure. You will need:
- A Board of Directors (directors of the company)
- Corporate Officers (executive team such as a CEO)
- Shareholders (owners of the company)
C-Corporations also have to pay corporate tax. Then when you take a salary payment, you will need to pay personal income tax on that amount too. This can be seen as double taxation.
Non-Profit Corporation
What is it? As the name suggests, a non-profit corporation is the opposite of a for-profit company. The goal of this company is not to earn profits for the shareholders (business owners). Rather, the company is looking to achieve another goal such as saving the environment.
Pros: Tax-exemption is the main benefit of incorporating as a non-profit, alongside the benefit of limited liability. If qualifying under IRS rules, the organization will not need to pay corporate tax.
Cons: The effort to create and maintain a non-profit organization is increased due to strict regulations such as the IRS Tax Code.