There are a lot of people that have made a lot of money by investing in the stock market over the years. At the same time, there have been fortunes lost, many times over, when the market crashes, or even when one sector has a crash. There are tons of variables, and millions of people worldwide trying to guess what each tiny bit of news will do to their stock, or the stock market in general.
There are thousands of different strategies that people and companies sell in book form, online, or charge monthly services for, so it’s hard to choose. There are also a lot of investing apps that a person can use to gain an advantage, but lots of other people are using the same apps at the same time. Here are some pros and cons of using these apps and then the top 3 in the market today with a quick review of each.
Take Care To Make Sure You Aren’t Being Played
There are so many of these apps available that it can be hard to decide which one to use. One of the problems with all stock market investment advice, from whatever source, is that you can never tell if they are giving you the advice for your benefit, or theirs.
There are a lot of shows on TV, I won’t bother naming them, but when they have an expert review a stock, many times the real goal is to get as many people as possible to start following the stock and end up buying it. They are carefully disguised as stock market analysts, but they are really salesmen for that particular stock on that particular day.
It is also quite possible for investment apps to be tainted in such a manner as well. You have to always be aware that there are millions of dollars to be made from getting people interested in certain stocks, or disappointed in a certain stock, so that the bigger players can leverage their own positions and either buy or sell, to make millions.
When the guy on TV says buy, the stock usually goes up, then all of the billionaires sell and leave the small investors with a loss. It’s called “pump and dump.” Be aware that it’s happening, all day every day, and stay ahead of the game.
So, one of the major cons against some investment apps would be that you have to be ultra vigilant and make sure that there is no ulterior motive for the app maker to earn money from the advice or algorithm in the app.
Other cons would be that many of the apps allow credit card usage which can be dangerous if you’re trading on a margin. Plus, most stocks shouldn’t be expected to outperform a 20% interest rate on a credit card purchase.
Another con would be that many apps are built for the bull market, and then fail miserably in the bear market. It’s quite possible to be lulled into an overconfident feeling while the market is on the upswing and then fail to pull out when it hits the skids. Many apps rely on a questionnaire to find out what your risk tolerance is and they may not correctly gauge your willingness to lose money in a down market.
The Pros Of Investment Apps
Of course, the most important thing is that they have massive amounts of information at your fingertips 24 hours per day. You can have an instant stock lookup and then buy in just few seconds. Or, you could pull out of a stock in a few seconds if there is an alarm based on certain parameters that you’ve preset. This gives you total control, if you take the time to set it up correctly and keep it up to date.
Most apps also allow you to set up a practice account so that you can make imaginary buys, sells and holds on a daily basis to see how you would fare in a real trade environment. This is an incredibly valuable tool that should be utilized long before you start investing real money. If the app you’re considering doesn’t have this trial feature, find one that does to learn the ropes before you invest your hard earned money.
Another great advantage to using investing apps is that if they are tied to a stockbroker with a low entry point you could start investing with $5 or $10. This is the next step to try after you’ve done the imaginary investing with imaginary money. It helps to start slow and work your way up so that you get used to buying and selling base on research, math, and information instead of emotion. You don’t want to fall in love with any stocks ever. Get used to pulling out altogether and waiting if the market is too volatile.
Here Are Some Of The Most Popular Investing Apps
First is the app named Stash, which is one of the easiest to get started with? It has excellent information available to help you find the stocks that you like, especially if they are on one of the exchanges, and make a purchase. They have a risk tolerance section to keep you from exceeding your maximum losses and keep you feeling like you’re making progress and not losing everything.
There are ways to set goals, as far as percentage gains, keep you into stocks that are of interest to you, and help notify you of dangers when you should sell. There is a low, $5 minimum account level, and the monthly service charge is only $1 for accounts under $2,000. There are even special custodial accounts to allow parents to set up stock trading accounts for their children. This is an excellent way to learn the ropes at a young age.
Acorns is a little similar to Stash, but it focuses on the college bound student and those in college to help them build their portfolios and save for their education. It combines an auto-savings tool that can be made to debit your account and automatically invest the money just a few dollars at a time. It manages your investment by computer based on your preferences.
The app is especially useful for those that are trying to save for a later time, like retirement or college education. It even has a 4 year free account available for those that have a valid .edu email address. Still, others only pay a nominal $1 fee per month for the service for taxable accounts, and $2 per month for IRA accounts. The account minimum is $0, so the entry point is as low as you can get. You’ll still need at least $5 to start trading.
The biggest advantage of an Acorns account is that it will handle all of the investment for you which is nice if you want to be a hands-off investor. This is especially valuable if you’re using the account as a savings tool that you want to be working in the background and you don’t want to be thinking about it all of the time.
There is another great part of the Acorns program that really shines. It has partnered with hundreds of large companies and made it possible to earn cash-back on most purchases. You have to use a special link when you make your payment to get the credit you deserve. Then, the cash-back bonus is automatically entered into your account in the next 60 to 120 days. It can add up if you pay attention to the companies on the list and always use the right link.
This is another very automated service for those that like the computers to keep them investing and safe. New investors tend to like the automatic selling of their portfolios if the market takes a downturn, and then the automatic investments while it’s on the upswing. Many older investors that don’t want to be bothered by the day to day changes in the market also prefer this type of service as well.
One disadvantage of Wealthfront is that the minimum account requirement is $500, much higher than many other investing apps. However, it can be easily argued that $500 is still too low if you really want to be an investor.
Wealthfront uses a group of solid portfolio advisors to manage funds that have a good track record. They also use a questionnaire to judge your risk tolerance so that they place you into the right fund. After that, almost everything is automatic and you don’t need to daily watch your investment to see what’s happening. This is great for people that really don’t want to spend the time to research all day in order to make quick trades based on current events. It takes the emotional part out of investments and aims for a slow, steady rise on a long-term basis.
There are lots of other investing apps available, and each has its own advantages and disadvantages to consider. Make sure that you read the online reviews to see how those that have been using the apps have fared. Plus, always keep a sharp eye out for anomalies that would indicate there are people taking advantage of you and your money.