There’s no doubt that apps have certainly streamlined life and made it possible for consumers to do a number of incredible things right from their phone—and one of those things is investing in the stock market at a negligible cost.
7 Best Investment Apps
These are the apps that bring Wall Street right to your phone. These seven incredible tools allow retail investors to play the stock market with a few flicks of the thumb. Their user interface is well-designed, their functionality is strong, and they’re highly rated.
Robinhood is named after the famed hero of medieval legend, and while Robinhood—the app, that is—won’t help you steal from the rich and give to the poor, it will help you invest in stocks, ETFs, options, and cryptocurrencies. Robinhood has made quite a splash as a commission-free investing tool for retail investors.
One of Robinhood’s unique selling features is its innovative facilitation of letting investors buy fractional shares. Investors can choose how much they’d like to invest, even if its less than the value of one share of stock; Robinhood will convert that dollar amount to fractions of a share. Since a low amount of capital is one concern that prevents many retail investors from buying shares of more expensive stocks like Amazon (NASDAQ: AMZN) or Google (technically, Alphabet, NASDAQ: GOOGL), Robinwood’s fractional investing capabilities give retail investors the opportunity to invest like wealthier investors. It’s similar to a mutual fund, but almost in an opposite sense; rather than having every dollar split among a number of stocks, one stock can be split among a number of investors. Robinhood has around 6 million users and with no fees: It makes its money on interest earned on customer’s cash balances.
Acorns is named after the idea of squirrels stocking away one acorn at a time in preparation for the winter. Acorn helps consumers automatically squirrel away a little change at a time and allocate those pocket change rivulets into a mighty stream of retirement wealth. Acorns allows you to link up a credit card or checking account to your Acorns profile. When you make a purchase, the app takes the difference between the purchase amount and the next round dollar. That change automatically deposited into your Acorns account. Acorns also frequently partners with as many as 350 different vendors (like Nike, Apple, and Uber) who will contribute to shopper’s accounts when those Acorns users make a purchase at that vendor. Acorns users can also elect to automatically deposit a fixed amount of cash into their account every week, whether that’s a simple $5 or a higher percentage of their income.
Acorns does not allow investors to select specific stocks to invest in, but they can select the degree of risk they want to take on among five options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive. The makeup of these exchange traded funds (ETFs) is comprised of government and corporate bonds, stocks of varying-sized companies, real estate, and international stocks. The proportions of each portfolio depend on the degree of risk that the investors want to take on—though it can be changed at any time—and those ratios are maintained with automatic rebalancing.
Round touts itself as an investment app that delivers high-end investment brokerage service strategies to investors of varying means. These investors will work indirectly with fund managers like Guggenheim Partners, Doubleline, PIMCO, Aberdeen, and Gabelli to name a few. Round does use the software of an automated questionnaire to generate an investor’s portfolio, but once that portfolio is generated, it’s actively managed by a real human advisor on Wall Street (maybe not literally Wall Street, but proverbially).
Round allows the average consumer to develop an institutional-grade portfolio by pooling investor capital and eliminating middlemen to deliver premium equity management with a low .05% fee—which is waived if the portfolio shows a negative return. The money managers that work with Round investors go beyond stocks and bonds to invest in other classes like real estate, merger arbitrage, and asset-backed securities (ABSs). Round says its mission is to make institutional money management accessible not just to corporations and the extremely wealthy, but to everyday investors who deserve access to high-quality investing normally reserved for the elite.
Stash allows users to invest in increments as small as $5 into 40 different exchange-traded funds, brokerage accounts, retirement accounts, and even to purchase fractional shares of stock. Stash also offers an online banking platform where users can access funds from their paycheck in advance with its 2-day get-paid-early direct deposit feature. The Stash Debit Card rewards cardholders every time they swipe it by giving them a fractional share of stock that corresponds to that purchase with the Stock-Back rewards program.
Stash also claims that it is a consumer-friendly alternative to big banking, with accounts that carry no overdraft fees, no monthly maintenance fees, no minimum balance fees, and access to a large network of ATMs. However, while the accounts themselves do not have fees, accessing Stash’s range of features does cost a small monthly payment anywhere between $1 and $9. At the higher end of the pricing point spectrum Stash users can also open custodial accounts to start helping their children save and invest. Stash also boasts a wide range of continuing educational tools for consumers to grow their understanding of money and make better financial decisions.
Wealthfront is a robo-advisor investment service that helps retail investors put extra cash to work with a diversified portfolio of low-cost index funds with minimal risk. Wealthfront advertises a proprietary Tax-Loss Harvesting software that minimizes losses to Uncle Sam and a nearly-negligible advising fee of 0.25%. Wealthfront also offers some financial analysis tools for consumers who link up their cash accounts, estimating milestones like how soon they can retire or pay off their mortgage.
Wealthfront also offers an alternative to the traditional savings account, which is notoriously unfruitful in terms of interest. By contrast, a Wealthfront cash account has an annual percentage yield of 1.78%, is FDIC-insured up to $1 million, and has no fees for maintenance or transfer. Incidentally, that nearly 2% rate is around 19 times higher than the average APY for a savings account in the United States.
A Portfolio Line of Credit is something Wealthfront has available that consumers can use to access quick cash and stay focused on their long term goals. Clients can use the money to cover a surprise bill, make a down payment on a property, invest in a new business, or even do some home renovations. Amazingly, there is no application process or credit check for investors with a portfolio of $25,000 or more, because the portfolio itself is the collateral.
Etrade is perhaps the most longstanding app option among investment apps, having opened its doors almost four decades ago in 1982. When Etrade first came out, the idea of individual consumers managing their own stock portfolio and choosing individual stocks through electronic means like America Online (AOL) and Compuserve was a novelty.
But Etrade paved the way for individualized financial management through online banking, which today has blossomed into some incredibly broad and diverse functionalities that can be managed right from the phone. Etrade is still a key player in the field, with around 5 million brokerage accounts. Individual stocks, ETFs, and options can be traded for a $0 fee for holders of an Etrade account. Etrade also offers cash accounts with a 1.75% APY, along with IRA accounts that are fee-free and carry no minimum. Unlike other app-based investment services, Etrade has live customer support from financial professionals, which is available 24/7. Etrade also offers a number of useful tools for researching securities, along with educational resources. There are over 4,400 mutual funds for investors to choose from, though options contracts, futures contracts, and bonds do have trading fees.
TD Ameritrade (which will soon be acquired by Charles Schwab) has been in business for almost 50 years and broke ground by being the first brokerage to offer customers trading capabilities over the phone with a push-button system in 1988. In 1995, they acquired the first electronic trading platform to ever open its digital doors—K. Aufhauser & Company, Inc—and then expanded its online trading capabilities over the next few decades.
Today, TD Ameritrade has over 11.5 million client accounts, $1.3 trillion in assets, and executes almost a million trades per day. As you can see from these numbers, TD Ameritrade is one of the largest and most active trading platforms, and this investing behemoth did not let itself fall behind younger competitors with the advent of app culture. One of TD Ameritrade’s strongest selling points is the complex suite of financial analysis tools it’s developed over the years for investors of all levels. In recent years, they’ve also developed personalized educational experiences tailored to each client based on their financial goals. Any level of investor can benefit from TD Ameritrade’s interactive courses and webcasts. Individual stocks, options, ETFs, mutual funds, margin trading, and cryptocurrencies are just a few of their financial investment products; they also offer managed portfolios and a collateral lending program for certain eligible accounts.
Which Investment App Is Right for Me?
That will depend on a number of factors like your finances, your goals, your trade experience, and your level of comfort with technology.
One of the easiest apps is Acorns. With a few simple steps, you link your debit card, select a portfolio type among 5 choices that matches your risk appetite, and move on with life—and you won’t need to do anything else. Of course, if you’re younger and have many years of saving and investing ahead, you might want to put it on a more aggressive setting, while if you’re older and heading toward a phase of actually using the assets in your retirement accounts, you may want to put it on some more conservative, less risky settings.
If you’re comfortable with tech, like to analyze stocks, and have some experience in the stock market, apps like TD Ameritrade are for you. The dashboard they offer can be tailored to the comfort level of every user. If you’re a seasoned investor, you can pull out all stops and use all the bells and whistles to get granular about decision-making—something that’s not really necessary or advisable for the average retail investor. Looking for dividend increases with great long term potential? Searching for undervalued penny stocks? TD Ameritrade’s dashboard gives you the tools you need to analyze Wall Street in detail.
If you’re like most Americans and find it hard to save the recommended 10-15% of your income, then building a portfolio of stocks can seem discouragingly difficult. Newer players to the game like Robinhood and Stash have come up with the incredible tool of fractional investing, which means you don’t need hundreds of dollars to buy one share of Facebook—you just need $1 to buy a portion of a share. This is an entirely new way of investing made possible by app technology, and it’s opening doors to casual retail investors everywhere. Whether you’re looking to build a dividend investing strategy or buy and sell the hottest stocks, Robinhood and Stash can help you do that, no matter your budget.
If you’re a higher-end consumer but still not in the category of having institutional money managers pilot your portfolio, options like Round and Wealthtrade put some pretty complex options into your hands, along with providing you the opportunity to work with financial advisors who have a more nuanced approach to investing than robo-advisors. Additionally, these apps offer cash accounts with high APYs and loan services that can be a real boon for discriminating and responsible consumers.
Again, it call comes down to your financial goals, the amount of capital you have to invest (or will have regularly) and your level of comfort with investing and technology.
FAQs About Investment Apps
Are investment apps worth it?
Investment apps are a great way to set aside small amounts of cash and invest money on a recurring basis and put it to work. In some cases, these apps can also provide other banking and lending services. Many of the apps have very minimal fees, while some have none at all. Finally, certain apps provide you with the power to engage in fractional investing, which was almost unheard of in the world of retail investing until apps. All it takes to get started is downloading an app from the Apple or Android Store. Investment apps are certainly worth it.
What is the best investment app for beginners?
Acorns is probably the simplest to use. You only have 5 different investment options, and depositing cash into the account is as simple as linking a debit card. Robinhood and Stash are also very simple and user-friendly, though they provide you with more options. Keep in mind that simplicity comes at the expense of having nuanced options and control over your investments. If you want something more elaborate that doesn’t require constant upkeep, Round is also a good option, since it pairs you up with a human manager.
Should you trust investment management to an app?
To be honest, trusting an app with investment management is (for the average retail investor) safer than trusting yourself. Apps that put your money management on autopilot, whether that’s with the help of robo advisors or human advisors, will most likely yield significantly better returns than your own efforts to outsmart the stock market and ride the ups and downs of the most volatile stocks. If you really want to manage your own portfolio, there are app options for that as well, such as TD, Etrade, and Robinhood. Just keep in mind that investment app management is often no different than depositing money into a mutual fund, the manager of which you’ll most likely never see. If you can trust that, you can trust an app—and you can check on the app far more often.
What are some benefits of using an app to manage your investments?
One of the greatest benefits of using apps is their convenience. Some of the services that investment apps offer are incredible, and just a few decades ago it was not possible to conceive of those services being accessible on a pocket-sized smartphone. The consumer-friendly analysis tools are another great feature common to many investment apps—graphs, charts, and tables lay it all out very simply for you.
How do investment apps make money?
Investment apps might make money on membership fees, which are usually very nominal. They might also make money on trading fees for options and bonds, even if they don’t charge fees for trading stocks and ETFs. Some of their mutual fund products might charge a money management fee. They could charge interest for asset-backed loans to consumers (in this case, the asset being the consumer’s portfolio). They can also make money from payment order flow, which essentially involves a third party paying brokers to order payments a certain way (namely, to the benefit of that third party). In short, there are a number of ways investment apps can make money.
How safe are investment apps?
Investment apps are about as safe as investing your money in a bank. Many of them are backed by the FDIC and subject to regulations and rules that keep investing safe for consumers. Since your cash becomes their cash (while invested), they also have a vested interest in securing their own assets, so you can be sure they will make sure their operations are secure from fraud and digital invasion by using measures like two-factor authentication.
What are the best investment apps for millennials?
Millennials are notorious for lacking the financial savvy and saving discipline that previous generations used to build their way to retirement. To that end, any of the investment apps that encourage saving (like Stash or Acorns) and provide engaging financial education and spending analysis are great tools for millenials. This type of mobile app can help younger consumers look beyond short-term goals and harness the power of long-term investments.
Do investment apps help me diversify my trading at all?
Whether you’re looking to build a list of monthly dividend payers or you want to actively trade stocks, investment apps can help you get there—especially for the average consumer, who will most likely just be buying, selling, or holding common stocks of U.S. companies. Investors who need a more diverse range of investment products like bonds, futures, and options should look at apps like TD Ameritrade. Some trading apps go beyond the stock market and allow consumers to invest in bitcoin, tap into real estate investing, and get a deeper degree of options for wealth management beyond the NYSE and NASDAQ.
What should you look for when comparing investment apps?
Before you start investing, you need to consider your goals as an investor. Do you want to build your own portfolio and actively engage in trading, or do you need more of an autopilot experience focused on a dividend investing strategy and long term growth? You will also want to consider the interface of the app, the other services it offers (such as lending) and the fees. Each app will have its pros and cons; you just need to determine which one of the finance apps has the most pros for you before you download the app and start investing.
What are some drawbacks to using an investment app?
Some investors like the experience of working with a human financial advisor at a full-service broker, and investment apps won’t really help them get that interaction. Some investment apps are essentially a robo advisor or very automated experiences that don’t allow a lot of customized control. Some investment apps may make it difficult to access your funds quickly if you need them, though others make them fairly accessible and even loan money against your portfolio should you need it.
Investing on the Go
Apps make many parts of life easier, from ordering pizza to checking your schedule. Investment apps are just one of the many ways that smartphones have changed the way consumers interact with the world. Retail investors can pour their spare change into the world of dividends, real estate, and share price increases that have been pooled and packaged to offer users convenient investing services. More active traders can manage their portfolio right from their phone, whether they’re in the office or at home (or anywhere). Investment apps are making this incredible financial flexibility possible, bringing the power of investing in the stock market to the average consumer.