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!
Inside the World of Venture Capitalists To Learn How They Can Help You
If you are familiar with the TV show “Shark Tank,” you’ve seen how entrepreneurs present such cash-worthy business ideas that the sharks are willing to pony up thousands, and even millions, of dollars to help.
The sharks are considered venture capitalists (VCs). This wealthy group of investors provides funding for thousands of start-ups that may have otherwise never have had a chance of getting off the ground. They also help established business with their expansion efforts.
A key difference between VCs and funding sources such as banks, which grant loans and line of credits, relates to risk. VCs are notorious for putting up their dollars for projects that a bank wouldn’t dare touch because of the high-risk of losses from the fledgling outfits.
There are many advantages of seeking VC funding if you are an entrepreneur, or even an established business owner. On that same note, there are just as many factors that can mitigate the benefits.
Here, we’ll go over the venture capital space, pointing out how it can be an alternative financing source for entrepreneurs.
How VCs Turn Start-ups Into Unicorns
If it weren’t for VC funding, the largest social media platform in the world may not exist. Mark Zuckerberg had the idea for the Facebook, but not enough money to fully fund it. The thought of connecting the world via a website that was simply comprised of posted pictures and such was not seen as a financially sound venture by many banks. Zuckerberg and thousands of other start-ups capitalized on VC funding, and turned their ideas into thriving businesses.
The most recent examples of start-ups that became behemoths thanks to VCs include Uber, Beyond Meats and Pinterest. They are good examples of how people with risky, curious ideas can turn them into multi-billion-dollar companies by literally starting with seeds, or seed money, that is.
VCs bank on the start-up flourishing financially, including it eventually going public. When this happens, early investors like VCs cash out their equity shares that are worth far more than they were when they initially invested.
The Stages of VC Funding
Venture capital funding can come from private individuals or from institutions.
In exchange for their investments, and their advice, VCs typically want a stake in the company. That means they want equity in the business.
There are many variations of the stages of VC funding. The most common are:
- Seed capital
- Early-stage capital
- Early-growth funding
Seed capital is for entrepreneurs who merely have an idea for a product or service. You may not even have a prototype because you don’t have the money to fund it. Seed funding often goes toward research and development (R&D).
Early-stage capital can be used to expand your team. As you prepare to roll out your product or service, early-stage capital can be used for marketing and advertising campaigns, too.
Early-growth funding can be especially useful in manufacturing. At this stage, your product or service may have grown so much that you need more capacity. You may need a larger facility, equipment or anything that help you keep up with demand.
“Is VC Funding for Me?”
These are some scenarios where a VC can help you.
- You lack the funds to scale your business’s growth.
- You are still working out of your garage on a shoe-string budget, and are unable to meet demand.
- Your production efforts are hindered because you don’t have enough employees.
- You lack the business or networking connections that could help you.
Not all business owners find VC funding to be ideal. Whether it’s the thought of losing any control of their operations, equity in their businesses, or both, many small business owners don’t see VC funding as a good idea.
More than likely, the VC will want some kind of say in how the business they are investing in operates. Their suggestions and ideas may not jive with those of the business owner, which could cause friction.
In determining if VC funding is worth considering, ask yourself these questions:
- Can I tolerate answering to others?
- Am I willing to let someone else dictate my schedule?
- How much ownership am I willing to relinquish?
If you answered yes to any of the questions, VC funding should be considered. Understand that VCs are not like banks. They set their own terms when it comes to their investments and they typically aren’t subject to the same rules as traditional finance outfits.
VCs Want Something for Their Money
If you answered yes to any of the above questions, there are some important things to know. Most important to understand is VCs don’t just invest and walk away. You must understand that you will have to give up equity and some, and sometimes most, of the control you have in your company.
If you want VC funding, this is something you will likely have to accept. Furthermore, if you have issues taking constructive criticism, or you see no benefit of giving a stranger a stake in your business, VC funding is not for you.
Understand, however, that the wealth of VCs goes beyond funding. It extends to them also having a wealth of knowledge and connections that you may lack. For example, if you are having production problems, such as not being able to meet demand, a VC’s connections could help. Your VC, or contact if you go with a firm, may have partnerships that you’d never have privy to.
To go back to the “Shark Tank” television show, one of the investors has ties to the home shopping network QVC. Often, she gets the products of the companies she invests in on the show.
The Money Game
Be prepared to give up at least 20% of your ownership to the VC who agrees to invest in your business. Some of them have been known to ask for 50% or more. They justify the percentage based on a number of factors that include:
- How much time the VC thinks they will have to spend to help you
- Your business’s valuation or worth
- The amount of money you want
The amount of ownership you may have to hand over may be unnerving, and that’s understandable. Entrepreneurs tend to treat their product or service ideas as their babies. Many are not keen on others tinkering with their product or service.
VCs rationalize the equity they expect as being fair because of the time and money they are risking on someone else’s project. Many don’t just sit on the sidelines, and not offer advice. They step in and may rule with more authority than some may like.
VC funding can come in many rounds, or what are called series. Start-ups often raise capital on an as-needed basis so there can several of these rounds as the company grows. During these rounds, funding can come from several different firms, and their individual investments can vary.
The VC will likely ask you how much money you have raised or invested on your own. Entrepreneur Matt Suster said in a “Both Sides” Medium post:
“If you’ve raised large amounts of money and can’t show much progress obviously you’ve got a tougher time to explain the past [than] if you’ve been frugal and over-achieved.”
Many VCs want to see at least 10 times their returns in less than seven years, according to Inc.
It states:
They're not interested in linear growth and will pressure you to manage the business to grow sales at that rate.
The VC Hunt Is On
If you’ve decided to go the VC route, here are some tips to standout in the crowd:
- Don’t rely on a friendly email to the potential investor in which you present a business plan. It will likely be lost in the shuffle. Instead, search out people who have direct relationships with the VC or firm and ask for a proper introduction.
- Keep potential investors you’ve reached out to in the loop by regularly sending them notes about the progress of your product or service.
- Legitimize your product or service by getting a patent for it.
- Attempt to raise capital on your own, if even just from friends and family, to show potential investors you’re committed financially.