How to Use Investing Apps for Beginners

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How to Use Investing Apps for Beginners

Investing apps have revolutionized the way that investors can buy or sell stocks, bonds, options, and other financial instruments. There are many different types of investing apps that allow you to invest in the stock market. Robinhood and other investing apps have been in the news a lot lately, so this article will give you a brief history of investing apps, what they are, and how to use them as part of a sound financial strategy.

History of Investing Apps

Historically, access to the stock market was limited to stockbrokers and other investment professionals. To buy or sell stocks, you would need to call up your stockbroker and have him or her place the order for you. In the late 1990s, ETrade was one of the first companies to allow individual investors to trade stocks through its website. Other companies followed in the 1990s and into the 2000s. 

Robinhood was one of the first investing apps to offer no commission on buying and selling stocks. Instead, they made their money by helping to facilitate the trade with market makers. Many other companies quickly followed suit, so that it’s currently possible to find many different investing apps that offer no fees on many types of investment trades.

Popular Investing Apps

If you’re wondering what an investing app is, you may be surprised at how many different investing apps there are. Here is a list of some of the more popular investing apps:

• Robinhood
• TDAmeritrade
• Schwab
• ETrade
• Betterment
• Acorns
• Sofi
• WeBull
• Wealthfront

Each of these investing apps offers unique features, including no fees on certain 

How to use Investing Apps

With many investing apps offering no commissions for trading stocks, it’s possible to buy and sell stocks rapidly over the course of a single day, that strategy is fairly risky. A better approach for most people is to invest in a more long-term fashion with a well-diversified portfolio. Historically, the stock market has been one of the highest-performing investments around but investing in the stock market over the short term can provide excessive volatility with large positive and negative swings.

To use an investing app, download the mobile app or use the website from your computer. You’ll need to enter your personal information and verify your identity. The next step in how to use an investing app is to transfer funds over to your new account. Some investing apps have a minimum deposit that you’ll need to transfer upon creating your account. 

Once you have funds in your account, you can use your app to invest in different forms of securities. Generally, almost all investing apps will allow you to set up a taxable brokerage account, and many offer additional types of accounts like IRAs or custodial accounts.

Concerns or Drawbacks of Using Investing Apps

All different investing apps take great pains to make sure that your account information stays private and secure. You’ll just need to make sure to keep your password and other information secure on your side. Remember though that many investing apps grant their users access to many types of complicated financial instruments. If you’re not comfortable with high levels of risk, you’ll want to make sure that you take things slowly and only make investments that you understand and are comfortable with.

One subset of investment apps are “spare change” apps that allow you to automatically invest extra money each month. Another potential drawback of investing apps like that is that you may be lulled into a false sense of security that you’re saving and investing enough. The magic of compound interest says that the earlier that you start saving and investing, the better off you’ll be down the road. Make sure that any money that you’re saving and investing is part of a comprehensive budget plan.

The Bottom Line

Investing apps have revolutionized investing and saving, providing what unprecedented access to the stock market to everyone. If you’re looking at getting your finances back on track, consider one of these investing apps as a part of your financial plan. No matter which investing app you use, make sure that it will help you save towards a productive financial future.

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Dan Miller (82 Posts)

Dan Miller is a freelance writer and founder of PointsWithACrew.com, a site that helps families to travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids.

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