The 5 Best Investing Apps for Beginners
Now Is The Best Time to Invest for All Beginners
Years ago, back when our parents and grandparents began investing, there were these things called "bucket shops." You'd have to drive down to the bucket shop and the stock broker would hand you a roll of tape a pen. You'd write down what stock you wanted to purchase, and how much you'd want to buy of that company, and then you'd drop the tape into the bucket. You'd need to buy them in lots of 100 shares per purchase, and the broker would charge you a HUGE fee for the pleasure. Now, thanks to the internet, everything has changed.
Stock transactions now are typically $0 commissions, and you have no shortage of options in how to invest. Do you want to day trade? Long term buy and hold? Short the market? All of these are available to you, almost instantly when you put in your home address and Social Security number. This brings about an issue that's almost diametrically opposed to the one our parents had, though: we now have too many options. Where do you start?
Today's guide will help you navigate the landscape of free investing apps, ranking the biggest and best options available to you. Three notes:
First: this is not investing advice, so please do your own research prior to investing or using any of the services listed here. Each situation is different, so please consult a professional for your individual situation.
Second: I am not paid by any of these apps. If you see a referral code in the article, I will receive a small commission from the platform. However, none of the opinion below is sponsored, and no company has reached out for partnership.
Third: None of these are bad options. In fact, they're all terrific options that I would personally be happy to invest with at any time with my own money. I'll just list my personal opinions on each below. With that, let's get started!
Public is an investing service "for all people," as the website is quick to say. They are a long-term focused, buy-and-hold type platform for younger investors that don't have much market savvy. They offer a wide variety of stocks and ETF's at no cost, as well as the 25 most popular cryptocurrencies. They also offer fractional shares, which helps someone with a smaller amount of money build a bigger position over time. They also include a savings account product to get people to save more money, a huge issue at the moment with pretty much every American.
Related: Investing In Stocks? Start Here.
The platform also offers a social media-type feature where you can follow other investors on the platform to see what they're buying and selling, along with the "Community" that encourages discussion on the platform about different trends and topics in finance.
The platform is associated with a wh0's-who of incredibly famous people. Included in the early stage investor list is actor Will Smith, all-around smart guy Scott Galloway, NFL player J.J Watt, YouTube legend Casey Neistat, music group The Chainsmokers (who founded their own VC fund???) and skateboarding 90's icon Tony Hawk.
What I don't love about the platform is the lack of options trading. I know that it's a long-term focused platform, but I want the ability to trade on volatility, which this platform doesn't have. You also cannot day trade, meaning if you purchase a company and something shocking happens, you have to wait until tomorrow to get out. Don't love that. Finally, they don't offer any tax-advantaged IRA's, only brokerage accounts.
What this company can boast is the lack of payment-for-order-flow (PFOF). That leads us into our number four platform....
Related: Stop Investing In Robinhood Stock
First, Robinhood is extremely approachable and has the best user interface of any of the services on this list. It's easy, straightforward and fun, which might be its biggest issue.
Robinhood's introduction of features like confetti when you place an order, or an inexplicable cat emoji when your recurring payment goes through are fun. A little too fun. Some critics say that these features make investing seem more like a game, rather than saving for the future, and Berkshire Hathaway legend Charlie Munger called Robinhood "a gambling parlor masquerading as a respectable business."
Robinhood has also come under fire for the PFOF model I mentioned earlier, which has led many to believe that users are not getting the best price on their trades. So why the hell is this on the list?
Because Robinhood has it figured out from a user experience perspective. Like I mentioned a minute ago, the UI is NICE. I love it. It's fast, functional and clean, which is pretty different to many on this list. It also doesn't restrict any of your trades, allowing you to invest in anything from individual companies to ETF's to oil futures contracts to options and margin. It's not for the faint of heart, but I think Robinhood is a great platform for diving in with both feet, and it's the one I personally use for my recurring index fund investing.
3. Stash Invest
I took a deeper look at Stash a couple of weeks ago, so I'll keep this section brief. Let it be known that Stash is the second best one on this list for account variations: they have taxable brokerages, IRA's, custodial accounts and even a banking product with a card that issues you stock instead of cash back.
The drawback to me about Stash is the cost. It's pretty expensive for the full feature list, clocking in at a hefty $9 per month. While that doesn't sound like much, investing products tend to be "sticky," meaning that it's usually hard for the consumer to shift to another product. That means that Stash has pricing power, and I'd bet anything that these prices will continue to tick up over time.
Despite the cost, it's a really solid platform that I think merits a look if you want to dive into retirement accounts or open an account for your kids.
This is by far the newest and smallest name on this list, but it's also the most interesting. Started in 2018 by former investment managers, Titan claims to be "a hedge fund for everyone." Lacking the need to be an accredited investor that is required if you want to jump into a real hedge fund, Titan has a minimum investment of $100 and is the closest thing to a robo-advisor we'll get to on this list.
Titan is an actively managed portfolio that is constantly scrutinized by the Titan investing team. You put your cash in, and they do the rest. The fund is tailored to you based on your age and when you need your money (next five years versus retirement, for example).
I find two things incredibly unique about Titan:
They hedge. Unlike many hedge funds, index funds, investment managers or your uncle who swears that his stock is the "next big thing," Titan really includes an allocation to a hedge in your portfolio. Based on your age and risk tolerance, they dynamically adjust the size of the hedge in your portfolio so, if the market tanks, you don't go with it.
Their research is awesome. I'm not looking to introduce new competitors into my own arena, but they send out daily and weekly investment research into the companies they invest in on your behalf. If they get into a position, they fully explain why. Same when they sell a position.
The downsides obviously start with the self-direction. This is the only entry on this list where you cannot choose your own destiny. If you're a true beginner and want a hands-off approach, then this is a good thing! However, if you want to be more active in your own management, then this platform is not for you.
The second downside is that this platform is also expensive. Typical hedge funds take a "2/20," which is 2% of your total account value per year plus 20% of your performance. Titan takes a 1% fee of your total account value each year after you hit $10,000 in account value. Anything under that and it's a $5 flat monthly fee.
Full disclosure: Titan is where I keep my Roth IRA and so far, so good.
1. M1 Finance
M1 is in that sweet spot where they're well known, but not yet public and still on the come up. M1, to me, is unbeatable. Here's why:
They offer everything an investor could dream of (except options). They offer individual stocks, bonds, ETF's, mutual funds, commodities and more. They also offer unique investing strategies that you can just add to your profile and then be hands off. These include things like auto-investments into hedge fund holdings, target-date funds, auto-rebalanced mutual funds, etc.
They offer everything in terms of accounts. Taxable, IRA's and custodials abound.
They have a banking product, which is awesome if you're looking for a one-stop-shop for all of your financial needs. They also offer a similar feature to Stash in that they offer stock back on their debit cards, rather than cash back.
They're also free, assuming you're only using the investing product. The banking product clocks in at a few dollars a month, which I don't love, but you can eat if you're fully taking advantage of the stock back program on their debit card.
Downsides include the lack of options trading and day trading, as well as what they call "trading windows." If you place an order that day, it gets fulfilled in one of their trading windows at either 10am or 3pm, meaning you can't fulfill an order immediately. For some, this will be a deal breaker. For long-term investors, this is a non-issue.
The Bottom Line
Well, there you have it. There's my list of the best "free" investing services on the market today. Please keep in mind that this list really doesn't include cryptocurrency trading, which will be another list in and of itself at some point. Some of these (Titan, Stash, Robinhood, Public) do include the ability to include crypto exposure, but each one of them has questions about pricing, fees and the custodial nature of the tokens in your account.
Which app do you like the best? Let me know in the comments below, and don't forget to sign up for my email list so you never miss a post. Thanks for reading, and I'll see you next time!