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 Line of Credit?
A line of credit can be an incredibly useful tool for reaching financial goals. If you foresee costs such as long-term health care which may be only partially covered by insurance, or a serious home renovation, a good line of credit can help you.
A line of credit is a large loan that doesn’t get borrowed all at once, as most traditional loans do. A line of credit is an agreement between a customer and a financial institution that places a limit on the total amount of money that the customer can borrow. Certain parameters must be reached and agreed upon beforehand. These parameters include the total debt the customer can incur, the interest rate, and the timing and amount of money for minimal payments back to the lender.
The main advantage of a line of credit is the flexibility it offers. These arrangements allow customers and lenders to come to a mutually beneficial arrangement based on the specific requirements that each party has. Borrowers can also adjust their payments by deciding to either pay the minimum or pay more to incur fewer costs in the long run. Of course, a borrower can opt to pay the balance of what they owe at any time.
Who is Eligible for a Line of Credit?
There are several kinds of lines of credit, each with their own requirements. Lines of credit fall into one of two primary categories: secured and unsecured lines of credit. Most lines of credit are unsecured, meaning that you don’t need to put up collateral to get them. Secured lines of credit do require collateral, but you won’t need to get a secured line of credit if your credit score and income/savings are satisfactory.
If you’re looking to get a standard personal line of credit, you will have to meet several requirements. The most important requirements are that your credit score is at least 680, you have a reliable income, and a credit history of no defaults. For most purposes, this is the type of line of credit you’ll be going for, and these are the requirements you must meet.
The most common type of secured line of credit is a HELOC (home equity line of credit). A HELOC must be secured by the market value of the home minus the debt you incur. To be eligible for these lines of credit, you’ll be subjected to similar requirements as those for personal lines of credit. The main difference is that you’ll also need a hefty piece of collateral as well.
How Do I Get a Line of Credit?
You can get a line of credit by going to a financial institution (usually a bank) and asking for one. Once you’ve decided to pursue a line of credit, the lender will want to talk to you and come to an arrangement. The more you bring to the table, the better the deal you’ll get. Signs of good credit, such as a high credit score and a high stable income, will open the doors to a better deal. If your credit is bad, you may have to accept worse terms, and in some cases, you’ll be forced to put up collateral.
Before you set out to get a line of credit, you should take steps to improve your credit score. It can also be quite wise to save money in advance of asking for one, as it may help you get a better deal.
Getting your line of credit will require you to prepare in the same way you would if you were getting another type of loan. In fact, the biggest difference with a line of credit is that the bar is set higher. The borrower of a line of credit has access to far more money than a borrower of a typical loan.
You’ll need to bring the following:
- Government-issued identification (and possibly your social security number)
- Proof of income, such as a pay stub
- Employer contact information
- Your contact information
- Tax returns
- Bank and credit information
The specific requirements will depend on the lender you’re going to. For example, some lenders will insist on seeing your tax returns for the last few years, while one year’s returns will work for most lenders.
Understand the Repayment Process
The repayment process is everyone’s least favorite part of taking out a line of credit. Once you’ve qualified for and received a line of credit, you’ll be given a period during which you can borrow money from the account. This period is also known as a “draw period" and it often lasts for several years. You may even receive a special card to use for your line of credit.
Once you’ve borrowed money from your line of credit, interest will start to accrue. Once you start borrowing money and accruing interest, you’ll be expected to start making minimum payments. When you start making payments on your debts, the money you pay will be returned to the line of credit. This means that your credit limit increases again as you pay back the money you owe.
Once your draw period is over, you’re in the “repayment period," which isn’t the most enjoyable part of the process, but it’s the part where your lender makes their profit. Once you’re in the repayment period, you’ll have a set time limit to pay it all back. At this point it’s recommended that you pay more than your minimums, otherwise interest will accrue, bogging you down financially.
Using Your Line of Credit
There are a few great reasons to use a line of credit, and some terrible reasons as well. The first question you’ll need to ask yourself is whether you’ll be able to pay it back without messing up your finances, which can have a negative effect on your life. This is especially true if you’re taking a secured line of credit.
The reasons to take out a line of credit are specific, long-term expenses such as:
- Financing a new home
- Financing a serious renovation
- Consolidating other debts (which you’d be able to pay off anyway, of course)
- For a new car or work/business vehicle
If you need to borrow money for any of the following, you should be looking for different kinds of loans and making use of a loan calculator:
- Paying for everyday expenses
- Paying off debts which you’re already struggling with
- Anything you don’t have a clear plan for paying off
Regardless of the reason, make sure you understand the repayment period and any other details before signing up for a line of credit. You want to make sure that it’s realistic, and will help you, not hinder you.