The fintech industry is showing significant growth and with that new investing apps have become available for investors of all ages to use to get better returns.
Fintech companies in the U.S. were given $12.4 billion in funding in 2018, which is 43% higher than what was given in 2017. Many of these companies are using the funds to create apps that will make investing and personal finance more available and more beneficial.
CB Insights reports that there are around 39 fintech companies each worth $1 billion or more. The companies are estimated to be worth a total of $147.4 billion combined.
As fintech companies continue to create new apps to handle different aspects of our financial lives, it is likely that more young investors will use them.
Below are 12 investment apps to consider for young investors.
Most young investors have trouble starting because they don’t have much money to invest. This is due to student loans, high rents, and low wages. However, the Acorns app allows you to invest your spare change, which can help get the process started.
The Acorns app has developed a new feature called Found Money, which allows you to save money by making purchases at certain partner companies. When you make a purchase at a Found Money partner, the company will credit your Acorns account with the applicable savings.
The one thing to be aware of is the fees. The monthly fees vary between $1-$3. That is going to seem high.
The text is saying that if you have an IRA account with $1,000 in it, you will be charged a 2.4% annual fee, which comes out to $2 a month. However, if you have $10,000 in that same IRA account, the annual fee drops to just 0.24%, or $2 a month.
You will need a discount brokerage account to buy stocks, ETFs, or mutual funds.
E-Trade may not be the cheapest discount broker, but it gets high marks from NerdWallet because of its excellent mobile app, excellent customer support and large investment selection.
The discount broker has mobile apps for both iOS and Android.
The E-Trade mobile investing app can help you find the right stocks to buy through options such as stock screening. It can even be accessed on Apple Watch. The second mobile app is OptionsHouse, the company’s options specialist, that lets you make options trades on the go.
E-Trade’s parent company, E-Trade Financial, is a publicly traded company with a market capitalization of $11.4 billion.
The only potential drawback is that you will pay more per trade if you do not frequently trade stocks.
You need to be able to save money in order to invest, and Mint.com can help you with that.
Mint is a personal finance app that helps users track their spending, create a budget, and understand their finances. It also tells users when bills are due and how much they can afford to pay.
Intuit’s free Mint app is used by over 15 million people in the U.S. and Canada to manage their finances. Intuit uses the app to promote its paid products, such as Turbo Tax, which can help users save money.
This deal is a great way to improve your financial situation if you take advantage of it regularly.
If you are a young investor interested in investing apps, you might want to check out Motif Investing. Motif Investing is a California tech startup that uses data science and automation to create thematic portfolios that its 350,000 customers can buy with a click of a button.
CEO Hardeep Walia uses data science to find the best investment themes and companies that benefit from those themes.
If you want to bet on a biotech stock that will experience significant growth, you should invest in Motif’s Feeling Better About Biotech portfolio. This portfolio includes up to 30 biotech stocks and ETFs, giving you a well-rounded exposure to the industry.
You can own a portfolio of stocks for as little as $300. Motif also has an Impact account which gives you a fully automated portfolio that aligns with your financial goals and values for as little as $1,000.
Impact account has an annual charge of 0.25%. Trading account is free if you use next market open trade, but it can be as high as $19.95 a trade if you are building a portfolio.
Motif is not best for those only interested in owning one or two stocks.
Commission-free investing app Robinhood is most popular among millennials, having launched in December 2014. It allows investing in stocks, options, and cryptocurrencies without commission fees.
Since its founding, Robinhood has gathered a customer base of over four million active users, with a high percentage of young investors; its average user is 32. Estimates suggest that Robinhood, with Snoop Dog as an investor, could be valued at a high estimate of $10 billion.
Robinhood was criticized in 2018 when it attempted to launch a checking account for customers that would pay 3% interest, with no fees and insurance from the Securities Investor Protection Corporation. The program never launched. It is now working with regulators to create a cash management plan that will be successful.
The commission-free stock trading service is continuing to gain popularity among investors.
The Stash Investment App was designed to help Americans grow their savings. It offers tools, guidance, and confidence to its users. Almost four years later, Stash has over 3.5 million users.
You can support and invest in companies you believe in for as little as $5 by owning fractional shares. It also allows you to invest in portfolios of stocks through ETFs for as little as $5. So you can get ahold of some of the most popular ETFs for a fraction of the cost it would be to hold them yourself.
The Money Under 30 website recently reviewed the Stash investing app and found that it is well made and well designed. Stash competes with Acorns for the attention of young investors, and has three monthly subscriptions available, charging $1, $3, or $9 per month depending on the plan you choose.
Stash has changed its business model to a subscription model, which means that instead of paying an annual management fee of 0.25%, you will now pay a monthly subscription fee. This fee will be in addition to the management fees of the ETFs in your account. There are no minimum balances for all three plans.
Nest Wealth is a robo-advisor that provides ready-made investment portfolios to people in Canada, the U.S., and the UK. Founded in 2014, it now controls 70% of the digital advisory space in Canada and is slowly making inroads in the U.S. where it launched in early 2017.
As of the end of March, Wealthsimple managed CAD$4.3 billion and had over 100,000 clients in three countries.
The company launched Wealthsimple Trade in March, which provides commission-free investing in Canada for stocks and ETFs. It’s the first company in Canada to do what Robinhood’s doing in the U.S.
and Amazon The text is saying that the average age of the app’s users is 31 and that it has 25,000 users. It also says that the app’s users like to buy stocks in companies such as Robinhood, Amazon, and Apple.
Chime is great for people who want to save money for emergencies or other purposes. Chime is different from most other round-up apps because it pays interest on your savings.
Chime comes with a long list of features:
- Get paid up to 2 days early with direct deposit*
- Fee-free overdraft protection of up to $200 if you qualify
- More than 60,000 free ATMs
- Savings earn interest (currently 0.50% APR)
The key feature of Chime that is useful for our purposes is that it automates your savings. Chime automate your savings in several different ways.
Chime has a rounds-up feature called “Save When You Spend.” With this feature, Chime will round up to the nearest dollar purchases made with its free Visa debit card. The round up will be transferred from your Spending Account to your Savings Account.
With Chime, you can have a portion of your paycheck automatically moved into your savings account.
Chime is recommended for other reasons too. It has one of the best secured credit cards to help customers build their credit. The Chime Credit Builder Secured Visa® Credit Card charges no annual fee and has no required minimum security deposit.
Best for kids and teens
Greenlight is most commonly known for providing a debit card for kids and adolescents. In addition, it has an investing platform to illustrate to young people how crucial saving and investing can be. With Greenlight Max, kids have the opportunity to invest in the businesses or ETFs they like best. There are zero trading fees and all trades have to be approved by parents.
Greenlight offers several ways to encourage savings. One way is round-ups. Transactions are rounded up to the nearest dollar and transferred to savings. Other ways include earning 1% cash back on all purchases and up to 2% interest on their savings.
In addition to investing,
Greenlight is a bank and budgeting app for children that costs $4.99 to $9.98 a month for up to five children.
Best for investing in individual stocks
Stash is a lot like Acorns in that you can connect your debit and credit cards to the account. What Stash does is monitor your transactions and then rounds them up to the nearest dollar. So, say for example, you spend $12.50 on something, Stash would round that up to $13.00 and then transfer that additional $0.50 into your Stash investment account. They do this until the round-ups total $5.00, at which point the money is transferred from your linked checking account into your Stash investment account.
Additionally, Stash costs $1 per month while Acorns has a $1 per month fee for accounts with balances under $5,000 There are several key differences to take note of when comparing Stash and Acorns. The biggest difference is that Acorns invests in diversified portfolios of ETFs, while Stash allows users to invest in fractional shares of individual stocks. Secondly, Stash has a much wider range of investment options with over 3,900 companies on its platform in addition to ETFs and bonds. Lastly, when it comes to fees, Stash costs $1 per month while Acorns has a $1 per month fee for accounts with balances under $5,000.
Stash offers a Smart Portfolio for those who prefer a portfolio of ETFs. The Smart Portfolio was introduced in March 2021 and uses stock and bond ETFs to create a diversified portfolio. The portfolio is automatically rebalanced for hands-off investing.
Stash costs $1-$9/month, in addition to the cost of any underling ETFs.
Best for microinvesting
While all round-up apps are a form of microinvesting, Qapital takes it to another level. In addition to round-ups, Qapital offers a number of Rules that will trigger automatic saving and investing:
- Payday Divvy: This feature enables you to automate how much of your paycheck goes to spending, savings and investing.
- Set and Forget: Set up automatic transfers to savings or investing every week.
- Guilty Pleasure: Enjoy your morning coffee at Starbucks, but save some money at the same time. You can designate the merchants and how much you save each time you shop there.
- Spend Less Rule: Set a spending limit at the grocery store and automatically save the difference between the set amount and what you typically spend.
- Freelancer Rule: For 1099 workers, you can set a percentage of all deposits of $100 or more to be transferred to Qapital’s FDIC-insured account for estimated taxes.
- 52 Week Rule: Save $1 in week one, $2 in week two, and so on, for a total of $1,378 over the course of a year.
- Apple Health: Set automatic transfers to savings each time you walk, bike or run
Best for paying down debt
You can use Qoins to create either a debt or savings goal, or what Qoins calls a Bundle, which is a goal that includes both debt payoff and savings. There are several options:
- Weekly transfers
- Payday transfers
- Smart Savings
This feature is determined by how much you want to save, and the Qoins algorithm picks the best savings plan for you. With this, you don’t need to link a credit or debit card like with other savings plans.
Qoins has two plan options, both costing $2.99 or $4.99 per month.
The Psychology Behind Automatic Savings
The following are several psychological factors that make round-up apps so effective. First, they require users to make just one easy decision, which is to turn on the round-up feature. Once the feature is turned on, it will continue working without needing any additional effort from the users. This simple decision makes it easy to overcome the status quo bias, which is the tendency to maintain the current state of affairs. Once the bias is overcome, the round-ups become the new status quo.
Round-ups happen automatically, without us having to make decisions each day, week, or month. They occur behind the scenes, even if we forget all about them.
Lastly, saving up small amounts of money over time can be less daunting than trying to save hundreds of dollars a month.