Q&A: "Which investment app should I use?"

Here's the question we'll be tackling today:

Hey Nicole! My name is Claire and I live in Philly. I've been reading your Bulletin and I'm really excited to start Index Funds and chilling. My question is, where should I start? Which investing app do you recommend for new investors?

As it turns out, Claire isn't the only person with this question. I'd actually say that this is the question I get most often, and I pretty much always say the same thing: investment apps are all pretty similar. It really comes down to a matter of preference—truly whichever one you like and will actually stick to is the right one for you. But I can help you decide which one you will like. Start by asking yourself this basic question: do you want to be a hands-on investor or a hands-off investor? Not sure? Here’s a breakdown of what each means:

Source: Miss Independent, duh!

For you hands-on folks:

... you’ll want to go with a discount brokerage. There are many of them out there, including: Merrill Edge, E*TRADE, TD Ameritrade, InteractiveBrokers, TradeStation, Ally Invest, and First Trade. Some of them, like Charles Schwab, Vanguard, and Fidelity, have their own investment offerings. To narrow down which one is a best fit for you, I'd compare/contrast these three features:

• Account minimum/minimum balance

• Commissions on trades (they should have none)

• Promotions

For you hands-off folks:

... you’ll want to go with a full-service brokerage. Examples of those would be: Merrill Lynch, CitiFinancial, Morgan Stanley, UBS, Morgan Stanley, Wells Fargo. The advantages of a full-service brokerage include: having extensive research, personalized recommendations for you and your goals, updates on market trends and tax laws, and access to initial public offerings (IPOs). Of course, you’ll have to pay for these perks, and there are much higher minimum balance requirements. To narrow down which one is a best fit for you, I'd compare/contrast these three features:

• Cost per trade

• Annual service charge and maintenance fees

• Exclusive investment access

You don't have to find "the one."

You have no obligation to be loyal to any one company for your whole life, although there are some benefits to having many of your assets at one establishment because companies generally treat their top customers the best.

If you don’t have a lot of money to invest, discount brokerages are a great option for you. If you do have the money but not the time to be actively reading up and rebalancing your investments, then a full-service brokerage might be worth a closer look. If you aren’t tech savvy, full-service is the way to go. However, if you are, then a robo advisor might be a good option. Robo advisors are sort of a hybrid between full-service and discount brokerages. You get some of the qualities of a full-service brokerage, like automatic management of your assets, but it’s done by an algorithm and basic investing principles rather than a truly tailored strategy by an actual human. Because of the use of technology, these companies have lower overhead than full-service brokerages (which employ, um, humans) and you get a discounted fee.

Some robo advisors are: Betterment, Wealthfront, and Robinhood. Some of the bigger banks are getting into the robo game, too, like Charles Schwab’s Intelligent Portfolios, Vanguard’s Personal Advisor, and Fidelity Go. Again, you should look at a fee comparison when you’re choosing, and note that oftentimes fees go down with the more money you put in. It’s also a good idea to download the app and play around with the interface to see how you like it before committing. You might find that one feels more intuitive to you and that’s a great reason to choose a particular company; an easy-to-use interface will help to keep you motivated to actually open it and engage with all of your beautiful growing investments.

xo,

Do you want to get rid of debt, lock in that raise, plan for your best retired life, find unclaimed money and generally cruise along the road to financial freedom? Here are more ways to get it together and get it all:

🎙Click here to subscribe here to my daily financial advice podcast, Money Rehab.

📖 Click here to order my latest book, Miss Independent.