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Investing

7 Portfolio Protection Strategies to Guard Against Volatile Markets

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Stock market volatility is a fact of investing, especially in the short-term. While stock market returns tend to smooth out over time, trending higher overall, it can still be upsetting when you’re watching your portfolio performance during a stock market event or during times when there are wide swings in performance.

In times of volatility, many investors start looking for portfolio protection. If you’re worried about what’s next, here are seven strategies you can follow to help you weather the next storm.

1. Turn off the TV

“The first thing to do if you want to protect your portfolio is stop watching financial news,” says Roger Wohlner, a financial advisor, MagnifyMoney contributor and founder of the blog The Chicago Financial Planner. “It’s easy to get wound up and make decisions based on the stock market, and not based on your risk tolerance and portfolio needs.”

Wohlner points out that recessions and market downturns are regular parts of the economic cycle, and that it’s better to stick with your plan than to change everything the moment the news gets bad.

“You’ll probably need to make tweaks as you go along,” Wohlner acknowledges, “but you should make those changes because you’ve considered your plan, your needs, and the fundamentals of your portfolio, not because someone is yelling about it on TV.”

2. Get diversified

Diversification can be another way to engage in portfolio protection. One of the main tenets of Modern Portfolio Theory, the Nobel-winning theory introduced by Harry Markowitz, is that the asset class makeup of your portfolio matters more than the individual securities you choose.

With diversification, you protect your portfolio in the event that one particular portion of the market is hit hard. It limits the damage done when one asset class plummets, or if a particular sector underperforms.

In order to diversify your portfolio, it’s important to consider the following factors:

  • Types of assets (stocks, bonds, real estate, etc.)
  • Industries or sectors (retail, technology, utilities, etc.)
  • Geography (including non-U.S. assets, in addition to U.S.-based assets)
  • Time frame (including dollar-cost averaging)
  • Strategy (including growth vs. income, large-cap vs. small-cap, etc.)
  • Mutual funds and ETFs to take advantage of the market as a whole, rather than limit your portfolio to a small portion of the market

“Appropriate diversification can help you weather market downturns,” says Wohlner. “Make sure you’re not relying on a few individual stocks, or that you are too heavily invested in a particular industry.”

3. Add non-correlating assets

While the stock market offers ample opportunities for growth, the reality is that systemic risk is a real concern. There are times when the whole market drops, and portfolio protection is difficult in those circumstances.

Adding assets that don’t correlate with the stock market can be a way to introduce a measure of portfolio protection. Some assets that don’t necessarily move the same way as stocks include:

  • Bonds
  • Real estate
  • Commodities
  • Currencies

Additionally, cryptocurrencies are increasingly being seen as an asset class, and some investors like to use peer-to-peer loans as a way to introduce non-correlating assets to their portfolios.

Wohlner warns against relying too heavily on non-correlating assets, though. “Your best bet is still a portfolio constructed mainly of stocks and bonds,” he says. “But if you want to take a small portion of your portfolio and use it for other assets, that can be one way to reduce your risk.”

4. Use a bucket strategy

Wohlner is an advocate of using a bucket strategy to avoid the issues that come with a steep stock market drop. With the bucket strategy, you construct your overall portfolio based around when you need access to your money.

Money you think you’ll need within three to five years should be kept in cash and cash-like securities.

“When you plan it this way, you shift assets before market problems, and you have access to the cash you need without having to liquidate stocks when they’re down,” says Wohlner.

Other buckets include a medium-term bucket with dividend-paying stocks and other dividend-related investments, and a long-term bucket comprised mostly of money you won’t need for more than 10 years that is invested mainly in stocks.

A bucket strategy can be used as a rebalancing tactic to help keep your portfolio in line with your goals and needs, no matter what the markets are doing, Wohlner points out.

5. Consider adding dividend-paying investments

Dividend-paying investments can contribute to portfolio protection by adding to a security’s overall return, as well as providing an additional hedge against inflation.

Some investors like to use dividend aristocrats, says Wohlner, because they are companies that have increased their dividends every year for at least 25 years. Additionally, real estate investment trusts are known for their dividends and their ability to add exposure to another asset class in your portfolio.

Related to dividend investments is the ability to invest in businesses or start businesses to receive another revenue stream. “Anytime you can find additional types of revenue, you can protect your portfolio and your finances better, no matter the economic situation,” says Wohlner.

6. Look for principal-protected and inflation-protected assets

It’s also possible to look for assets that offer portfolio protection in specific ways. You can add assets that guarantee your principal as well as securities designed specifically to combat inflation.

  • Principal-protected assets guarantee that your principal will be safe. A principal-protected note is one example. Say you invest $500 in a note tied to the S&P 500. The note issuer would use a portion of the money to buy a zero-coupon bond and invest the rest in call options on the S&P. After maturity, you receive your principal plus your portion of any profits. If the S&P loses, you still get your original investment back.
  • Inflation-protected assets are designed to offer a return that at least keeps pace with inflation. Treasury Inflation Protected Securities (TIPS) are a good example. The interest rate you receive on TIPS adjusts with inflation, so your principal isn’t eroded by the impact of rising prices.

While these types of assets can provide you with peace of mind, they might not allow you to grow your wealth like you need to. “There’s nothing wrong with having a portion of your portfolio in these assets,” says Wohlner. “But you can’t rely on them completely to provide the portfolio growth you need.”

7. Use options to protect against volatility

Advanced investors sometimes use various options strategies for portfolio protection. While there are many different types of options, put options are popular because they allow investors the right to sell a stock at a certain price within a set amount of time. If a stock drops, profits from selling the option can offset the drop in price.

There are other options strategies that can be employed to protect unrealized profits and offset portfolio losses. However, these strategies themselves can be risky and Wohlner warns against becoming too reliant on options as a strategy to protect your portfolio.

Bottom line

For most investors, the best way to protect a portfolio is to come up with a plan that helps them achieve their goals and then stick with it, rather than selling stocks in response to a perceived crisis, according to Wohlner.

“You can rebalance as needed and change the plan as circumstances require, but most investors are better off preparing for inevitable downturns ahead of time with a good long-term portfolio strategy,” he says. “Anytime you’re making changes just because the market is doing something that scares you, chances are things will work out poorly for you.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here

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Investing

Personal Capital vs Betterment: Which Robo-Advisor Is Best for You?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

If you’re looking for a robo-advisor to handle your investments, two major players to consider are Personal Capital and Betterment. These two services offer a range of investment account types and beneficial features. However, they cater to very different customer groups.

Betterment has fewer investment options, but there are no account minimums and it has lower fees on smaller balances, making it an excellent option for new investors. By contrast, Personal Capital appeals to more seasoned investors. It requires customers to have at least $100,000 in investments, but the company offers individual stock investment options and more personalized attention.

We created a side-by-side comparison to help you differentiate between these two robo-advisors and choose the one that’s best for you.

Personal Capital vs Betterment: Feature comparison

Personal CapitalBetterment
Amount minimum to open account
  • $100,000
  • $0
Management fees
  • 0.89% for accounts of $100k - $1M
  • 0.79% for accounts of $1M - $3M
  • 0.69% for accounts between $3M and $5M; lower fees for accounts over $5M
  • 0.25% for Digital offering (no minimum account balance)
  • 0.40% for Premium offering ($100,000 minimum account balance)
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
Portfolio
  • Personal Capital offers 6 high-level asset classes.
  • 12 asset classes represented in ETF portfolio
Automatic rebalancing
Tax loss harvesting
Offers fractional shares
Ease of use
 
 
Mobile appiOS, AndroidiOS, Android
Customer supportPhone, 24/7 live support, Email, 5branch locationsPhone, Email

Personal Capital vs Betterment: Management fees

If you’re looking to invest your money, it’s important to pay attention to the fees robo-advisors charge; they can vary widely from company to company. Particularly if you don’t have a lot of money to invest, Personal Capital will be more expensive than Betterment, and it has a higher minimum investment.

Personal Capital’s robo-advisor option requires you to invest at least $100,000 to get started, and charges a tiered annual fee based on the assets you have under management. This fee covers the investment advice you receive, asset custody, and trade commissions:

  • Up to $1 million: 0.89%
  • First $3 million: 0.79%
  • Next $2 million: 0.69%
  • Next $5 million: 0.59%
  • Over $10 million: 0.49%

That is the only fee you’ll pay with Personal Capital; there are no transfer fees, inactivity fees, or monthly maintenance fees.

For new investors, Betterment provides excellent value with low fees. There is no account minimum to get started, and there is a 0.25% annual management fee for its Digital plan. If you have at least $100,000 invested and want more personalized attention, you can upgrade to Betterment’s Premium plan and gain over-the-phone access to financial experts. The Premium offering has a 0.40% annual management fee.

For investors with more assets, those fees can be even lower. If you have over $2 million under management through Betterment, your annual fee drops — to 0.15% for the Digital plan and 0.30% for the Premium plan — on the portion of your balance over $2 million.

With Betterment, your fee covers the cost of the advice you receive, transactions, trades, and account administration; there are no additional transaction fees.

Another factor to consider is the companies’ expense ratios — how fund’s assets are used for administrative or operational expenses. The higher the expense ratio, the lower your returns will be. Personal Capital reported that its average expense ratio is 0.08%. By contrast, Betterment posted that the average expense ratios of its recommended portfolios was 0.07% to 0.15%. Keep in mind that these expense ratios are dependent on your allocation, and is included solely for comparison’s sake.

Personal Capital vs Betterment: Special features

With both Personal Capital and Betterment, you can connect outside accounts to get a more complete picture of your finances and better plan for your financial goals accordingly.

However, Personal Capital offers more features for seasoned investors, including 24/7 call access, even on weekends. You’re also eligible for advice on 401(k) allocations and insights into your cash flow and spending.

If you have at least $200,000 invested with Personal Capital, you’ll get even more additional features, including two dedicated financial advisors, customizable investments in individual stocks and ETFs and planning services for saving for college. Once you have over $1 million in assets, you’ll get access to estate planning services, too.

By contrast, Betterment lacks many of those features. You can only invest in ETFs and not individual stocks, regardless of your investment level. And, while you can invest in individual investment accounts and IRAs with Betterment, you can’t create a college savings plan.

If you’re looking for a cash management option in addition to your investments, Personal Capital and Betterment both offer high-yield savings options. Note that the top option on our list of the best high-yield savings accounts does offer a better APY than either robo-advisor’s cash management account.

  • Betterment Everyday Savings: With Betterment’s Everyday Savings, you’ll earn 2.38% APY (as of Sept. 12, 2019); there are no fees. You’re also eligible for up to $1 million in FDIC insurance; funds are deposited in up to four partner banks, each offering $250,000 in coverage. If you elect to exclude certain partner banks from receiving deposits, your level of FDIC insurance may be lower.
  • Personal Capital Cash: Personal Capital Cash has no account minimum, and allows you to earn 2.05% APY (as of Sept. 12, 2019). Your money is also insured by the FDIC, and you’ll get six times the coverage of what most banks offer.
CompanyAccount NameAPY
Personal CapitalPersonal Capital Cash2.05%
BettermentBetterment Everyday Savings2.39%
VioBankOnline Savings Account2.52%

Personal Capital’s advantages

  • Personalized attention: As a Personal Capital customer, you get access to a 24/7 customer service line and can talk to a financial advisory team. As your investments grow, you will also get access to two dedicated financial advisors.
  • Individual securities: With Personal Capital, you can invest in individual stocks, not just ETFs.
  • Socially-conscious investment options: Personal Capital’s Socially Responsible Personal Strategy program seeks out companies that are positively impacting environmental, social, and governance issues.
  • College planning: Personal Capital offers an Education Planning tool you can use to plan for college costs, including determining how much you need to save each year to pay for school.
  • Tax optimization: Personal Capital works to optimize your tax bill by avoiding mutual funds and allocating high-yield stocks and fixed income into tax-deferred or exempt accounts. It also engages in tax loss harvesting, using individual securities to offset gains or qualify for a deduction.

Betterment’s advantages

  • Low account minimums: Betterment doesn’t have an account minimum, so you can start investing with just $1, rather than having to wait until you’ve saved enough money.
  • Fractional shares: Betterment allows you to purchase fractional shares, so you’re able to invest your entire deposit.
  • Hands-off investing: Betterment is perfect for investors who want to set-it-and-forget-it. You can make an initial deposit, set up recurring investments, then allow Betterment to do the heavy lifting by rebalancing your account for you based on your risk tolerance.
  • Charitable investing: With Betterment, you can donate shares rather than cash to partner charities including UNICEF, Feeding America, Wounded Warrior Family Support, and GiveWell. Not only will you be able to help a worthy charity, but you’ll also avoid the capital gains tax on the sale of your investment.

Personal Capital vs Betterment: Which is best for you?

When it comes to deciding between Personal Capital and Betterment, think about your current financial situation and your future goals.

If you’re new to investing, don’t have much money to deposit or want to be a hands-off investor, Betterment is likely the better choice for you. It offers lower fees, has no account minimum, and completely manages your investments for you. Plus, you can invest in fractional shares, making every dollar work harder for you.

If you have at least $100,000 to invest, and need more personalized attention or assistance with saving for college or estate planning, Personal Capital may be a better fit. Personal Capital has higher fees than Betterment, but you get 24/7 access to support staff, and you can even talk with dedicated financial advisors.

If you’re still exploring your investment options, make sure you check out the best robo-advisors of 2019.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kat Tretina
Kat Tretina |

Kat Tretina is a writer at MagnifyMoney. You can email Kat here

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Investing

The Best Investment Apps of 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Investing in the market used to require a dedicated workstation with reports and research piled high, from where you would call in your stock picks like a general ordering an air strike. Today the ubiquity of smartphones has made investing only a little more complicated than ordering a pizza, a level of convenience that makes it easier than ever for Americans to start putting their money to work in the market.

But with investment apps sprouting like mushrooms in the iOS and Android app stores, each claiming to offer the lowest fees and tons of cutting-edge market research, it’s not easy to choose which one is right for you. Finding an investment app you’ll be happy with requires matching your investment strategy and habits with the app that fits best. We’ve done some of the leg work for you by evaluating the most highly-regarded investing apps out there.

Best investment apps for active investors

Whether or not you’re an active investor has less to do with the volume of trading in which you engage — although that’s a factor — and more with how willing you are to dive into the nitty-gritty of picking specific investments. If you love to make individual stock picks and spend hours poring over news and rumors about where the market may move next, you’re likely an active investor.

AppsFee per tradeAccount Minimum
J.P. Morgan$2.95$0
Robinhood$0$0
Fidelity$4.95$0
Stockpile$0$0
Charles Schwab$4.95$0

J.P. Morgan You Invest

JP Morgan Chase Bank, N.A You’re probably familiar with the name J.P. Morgan, given J.P. Morgan Chase is one of the biggest players in the financial industry. But you shouldn’t feel intimidated by their You Invest app, which provides users with reams of research in order to help you make educated calls when it comes to investing. You Invest also provides 100 free trades for one year, which can be a nice incentive to start the process for new users.

  • Fee per trade: $2.95 per trade ($0 if you’re a client of Chase Private Client, Chase Sapphire Banking, J.P. Morgan Private Bank or J.P. Morgan Securities).
  • Account fees: There’s a $75 full account transfer fee and a $75 partial account transfer fee, but no annual maintenance fee or inactive account fee.
  • Securities traded: Stocks, ETFs, mutual funds and bonds.

This app is good for: Investors who like the idea of directing trades themselves but still feel they need more education and data should take a look at J.P. Morgan You Invest, as it offers some of the best educational tools out there.

This app is bad for: Investors planning on being extremely active with their trading. Although $2.95 per trade is fairly cheap, there are certain discount brokers that offer lower pricing on high-volume trading.

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Robinhood

Robinhood Markets Inc While lacking the storied history of J.P. Morgan, Robinhood has achieved a great deal of fame in a short amount of time, thanks in part to its zero-fee trades. However, don’t expect this app to hold your hand with research materials and educational tools, as Robinhood is focused on the basics, which means there’s not much to do on the app besides trade.

  • Fees per trade: $0.
  • Account fees: There’s a $75 full account transfer fee, but other than that, no fees are associated with the account.
  • Securities traded: Stocks, ETFs, options and cryptocurrencies.

This app is good for: The biggest selling point of Robinhood is the lack of a fee per trade, meaning it should appeal to either beginning investors looking to get their feet wet or experienced stock traders wanting a handy way to move a large volume of trades on the go.

This app is bad for: Investors hoping for a lot of depth in the securities they can trade or types of accounts available will be disappointed by Robinhood — currently you can only invest in basic securities and taxable accounts (meaning no IRAs). Also if you need any sort of guidance about which stocks to invest in, you won’t receive it from Robinhood.

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Fidelity

Fidelity Brokerage Services LLC A broker with more than 70 years of experience, Fidelity offers a mobile app that’s the equivalent of keeping a miniaturized broker in your jeans’ pocket. The app gives account holders access to the day’s news regarding the market, a snapshot of how your investments are performing, the ability to trade at the push of a button and even an option to call a real broker if you need a consultation.

  • Fees per trade: $4.95.
  • Account fees: None.
  • Securities traded: Stocks, ETFs, mutual funds, bonds, options, futures and commodities, foreign currencies, cryptocurrencies.

This app is good for: Investors looking for a full-service broker offering a wide variety of securities to trade should take a hard look at Fidelity‘s mobile app. Given the lack of account fees and the reasonable $4.95 per trade, this app will likely hit the sweet spot for investors wanting the full investment experience while on the go.

This app is bad for: Those looking for an ultra cheap fee per trade may be disappointed with Fidelity‘s $4.95 fee.

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Stockpile

Stockpile Stockpile‘s unique offering is the ability to buy gift cards of stock for individual companies, allowing you to pass along the cards to a lucky recipient. It’s a clever way for parents to get their children started investing at the next birthday party, but Stockpile also has a mobile app that allows customers to trade stocks and ETFs. Stockpile allows you to invest in fractional shares, but the variety of securities is limited compared to what you can get with other brokers.

  • Fee per trade: $0.99 per trade when using Stockpile’s app to buy and sell securities. Fees for electronic and physical gift cards run higher and can be found here.
  • Account fees: None.
  • Securities traded: A limited selection of stocks and ETFs.

This app is good for: True novices who want to begin dabbling with investing or those investors interested in fractional stocks. Investors happy with the stocks and ETFs available from Stockpile and want to engage in lots of trading will also be happy with the $0.99 per trade fee, one of the lowest available.

This app is bad for: Any investor who wants a robust list of securities to choose from.

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Charles Schwab

The Charles Schwab Corporation One of the original discount brokers, Charles Schwab still offers its customers a relatively low fee per trade while still providing plenty of bells and whistles expected of a larger broker. The Schwab Mobile app gives users a live news feed from CNBC, allows the trading of stocks, ETFs, mutual funds, and options, and lets you transfer funds between Schwab brokerage accounts.

  • Fee per trade: $4.95.
  • Account fees: None.
  • Securities traded: Stocks, ETFs, mutual funds and options.

This app is good for: Investors looking to trade with one of the most reputable discount brokers around and who need lots of research and education to help guide their trades.

This app is bad for: People who want to trade more exotic securities over a mobile app, such as foreign currencies.

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Best investment apps for hands-off investors

Many investors aren’t looking to micromanage their investments and prefer a more passive approach. The apps offered by the brokers and robo-advisors below will allow you to select a portfolio or investment strategy for your money, which is managed automatically to help you achieve your goals.

Robo-AdvisorsManagement FeeAccount Minimum
Wealthfront0.25%$500
Personal Capital0.89%$100,000
M1 Finance0.00%$100
Acorns$1 per month$0
Betterment0.25%$0

Wealthfront

Wealthfront Advisers LLC Wealthfront provides a wide variety of account types, from IRAs to 529 college plans, which means that there is likely something for everyone. The relatively low fees associated with this robo-advisor, plus its ease of use and ability to show you all of your investment accounts (not just the ones you have at Wealthfront) at a glance makes it one of the world’s top robo-advisors.

  • Management fee: Annual fee of 0.25% of your account balance.
  • Account fees: None.
  • Account minimum: $500.

This app is good for: Investors who don’t mind paying $500 to open an account and want to invest in funds with low expense ratios — Wealthfront promises none of their funds have expense ratios exceeding 0.16%.

This app is bad for: Individuals who do not want to commit to the account minimum. The $500 account minimum isn’t very expensive, but many of Wealthfront‘s competitors in the robo-advisor space have no account minimums. Those looking to get started in investing with the spare change in their pocket should look elsewhere.

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Personal Capital

Personal Capital Corporation The Personal Capital investment app takes the features of an investment advisor and the tracking and monitoring capabilities of a budgeting app, like Mint, to give you a holistic view of your net worth. Investing with Personal Capital means an actual human being will manage your portfolio, but that comes with higher fees than you would get with a robo-advisor.

  • Management fee: Annual fee of 0.89% on account balances up to $1 million. When you invest more than $1 million, Personal Capital adjusts its annual fee based on a tiered fee structure.
  • Account fees: None
  • Account minimum: $100,000

This app is good for: Wealthy individuals looking for an app that provides the type of personal care and attention they would expect with the considerable size of the investment they are making.

This app is bad for: Obviously anyone who doesn’t have at least $100,000 to invest. Don’t worry, there are plenty of other great options for investors lacking a six-figure savings account.

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M1 Finance

M1 FinanceOne of the most alluring features of the M1 Finance robo-advisor is its fee structure — it has virtually no fees. That means you won’t pay an annual management fee or a fee per trade. Coupled with the low $100 minimum needed to start investing with the account, this price structure makes M1 Finance a good choice for those who want to start investing without having a lot of extra money lying around. With M1 Finance, you can either build a custom portfolio of stocks and ETFs, or choose from more than 80 expert portfolios managed by the app. In addition, you can invest in fractional shares.

  • Management fee: $0.00.
  • Account fees: There’s a $20 inactivity fee for accounts with $20 or less for a period of 90 days or more. There’s also a $100 transfer fee if you’re taking money from your M1 account to another broker.
  • Account minimum: $100 — while you can technically open an account with less than $100, you won’t begin investing until you reach this threshold.

This app is good for: Those looking for low fees will be happy with M1 Finance’s pricing, especially those who just want to invest in basic securities such as stocks and ETFs.

This app is bad for: Investors wanting to branch out beyond stocks and ETFs will be disappointed, as those are the only securities supported by M1 Finance’s platform. M1 Finance also lacks tax-loss harvesting, a money-saving feature commonly found with other robo-advisors.

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Acorns

Acorns Advisers, LLC The Acorns robo-advisor may be the ultimate “set it and forget it” app, with the idea being that the spare change from your everyday purchases ends up invested in your portfolio instead of gathering dust on your bedside table. Users who sign up for the app sync Acorns with their checking account and credit cards, and their purchases are rounded up to the nearest dollar – the “spare change” going into a portfolio that you’ve already selected. If you want to start building retirement savings, Acorns Later is an IRA account that works in sync with the basic account functionality.

  • Management fee: $1 per month for Acorns Core investing account. Additional pricing: $2 per month for Acorns Core + Acorns Later, the company’s IRA account product; $3 per month for Acorns Core + Acorns Later + Acorns Spend, the company’s cash management account.
  • Account fees: None.
  • Account minimum: None.

This app is good for: People who want to start investing but don’t really want to put any effort into it. Once you set it up, Acorns automatically takes care of investing your spare change so there’s no chance that you’ll forget to put your money to work.

This app is bad for: Those looking for either the cheapest pricing structure or the most control over their investments may not be happy with Acorns. $1 a month for the basic investment account doesn’t sound like a lot (and it’s not), but when represented as a percentage those 12 dollars a year can far exceed the 0.25% annual fee charged by Wealthfront, for example, depending on how much you invest.

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Betterment

Betterment Holdings Inc. Betterment has recently branched out into savings and checking accounts, but still remains focused on robo-advising for interested investors. Investing this way is completely passive — you’re not picking the ETFs in your portfolio, but trusting Betterment and its algorithm to make the right call based on the goals and preferences you share with the company. Investing $100,000 or more gets you access to Betterment’s premium account, which includes in-depth advice on investments outside of Betterment, plus consultations with an investment professional to build a plan for managing 401(k)s, real estate and individual stocks.

  • Management fee: 0.25% annual fee for basic investing account; 0.40% annual fee for a premium account that gives you more access to broker advice and other features.
  • Account fees: None.
  • Account minimum: None for the basic account; $100,000 for the premium account.

This app is good for: Passive investors who may also be interested in the savings and checking accounts Betterment is rolling out.

This app is bad for: Someone looking to fine-tune their investments beyond the options presented by Betterment.

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Investing app FAQs

The investing apps for hands-on investors reviewed above give you control over your investments anytime, anywhere. You can trade and sell investments with just a few taps on your phone screen.

Apps for hands-off investors offer low fees and manage your investments for you, removing some of the guesswork and confusion that plague beginning investors. These apps can choose investments that fit your goals, without requiring you to do tons of homework or research.

Micro-investing apps like Acorns and Stockpile lower the barrier to entry. Instead of needing hundreds or thousands of dollars to start investing, you can invest with very small amounts, in fractional shares. You can make small recurring deposits with your spare change, so you can invest without having to remember to set aside money each month.

Some investment accounts have limited account options, offering just stock or even pre-baked ETF portfolios, so you may not always be able to open a tax-deferred account like an IRA. And because you’re investing relatively small amounts, it’s possible you won’t be setting aside enough money for your future. As your financial situation improves, it’s important to re-evaluate your investment strategies and goals and contribute enough money to reach those milestones.

Robo-advisors are based on algorithms that build and manage investment portfolios for online brokers and investment apps. Robo-advisor accounts may have lower account minimums and low fees, making them a low-cost choice for new investors. These accounts automatically rebalance your investments as needed to take advantage of market changes, helping you build wealth without demanding that you pay attention to markets.

As you decide which investment app to use, keep these factors in mind:

  • Fees: Many investment apps charge trading fees, which can eat away at your returns. Look for an app that offers low fees — some even offer $0 trades.
  • Promotions: To attract your business, some investment apps offer promotional offers, such as 500 commission-free trades with a qualifying deposit, which can help you save money on your investments.
  • Account minimums: While some investment apps allow you to get started with as little as $0, others require much larger deposits, which may make it difficult to get started.
  • Range of assets: Look for an investment app that has a range of assets to choose from, such as mutual funds, stocks, bonds and exchange-traded funds (ETFs).

Each app has its own unique range of assets you can buy and sell. Some allow you to invest in stocks, bonds, mutual funds and ETFs, while others may offer only one class of assets. Before you invest your money, make sure you understand what investment options are available and choose the ones that make the most sense for your individual situation.

If the company is part of the Securities Investor Protection Corporation (SIPC) — nearly all major investment firms are — your investments are protected up to $500,000 if the company goes out of business. Keep in mind, though, that insurance does not cover you if the market falls. There are no guarantees when it comes to investing – you could end up losing money as the market changes.

The great thing about some of these investment apps is that you don’t need a lot of money to get started. In fact, apps like Acorns, Stash, and Robinhood allow you to get started with just a few dollars; after that, you simply invest your spare change. Over time, those small amounts will grow, helping you build your savings.

A perk of using investment apps is that they make investing simple. You don’t have to understand market fluctuations or have an in-depth knowledge of past stock performance to get started. Investment apps usually have robo-advisors and carefully picked investments that do all the hard work for you. Just set up your initial investment and recurring deposits, and you can be a mostly hands-off investor without stressing about managing the account yourself.

About our ranking

Please see below for the full list of apps considered for this review. The investment apps were evaluated based on the rating they received from the iOS and Android stores, the fees associated with each app and investment account, and the range and quality of the investment experience.

All apps considered:

Acorns
Ally Forex
Ally Invest
Ally Invest Managed Portfolios
Betterment
Charles Schwab
Charles Schwab Intelligent Portfolios
E-Trade
E-Trade Core Portfolios
Power E-Trade-Advanced Trading
eOption
eToro
Fidelity
Fidelity Go
Firstrade
Fundrise
Interactive Brokers
J.P. Morgan You Invest
J2TX – Invest ETH
Just2Trade
Just2Trade 0 vs. 2.50
Just2Trade Pro
M1 Finance
Merrill Edge
Merrill Guided Investing
My Merrill
MoneyLion
Motif
Nadex
Personal Capital
Robinhood
SigFig
SoFi Invest
SogoTrade
Stash
Stockpile
TastyWorks
TD Ameritrade
TD Ameritrade Essential Portfolios
TD Ameritrade Mobile Trader
TD Ameritrade Thinkorswim
TradeStation
TradeStation Futures Plus
USAA Investments
Vanguard
Vanguard Personal Advisor Services
Wealthfront
Wealthsimple
WiseBanyan
Zacks Trade

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James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here