People are trading more now than ever before — in fact, according to Pew Reseach, more than half of US households are now active in the stock market.
What caused this change?
The increase in participation is due, in part, to how easy it is to get started. You no longer need an expensive account manager -- you can invest and trade online — often right from an app on your phone.
But, before we talk about the different apps you can use — and the pros and cons of each — let’s talk about the different types of investing.
Understanding the Difference Between Investing and Trading
People get involved in the markets for any number of reasons. Some are looking to save for retirement; others want to make sure the value of their investments doesn’t decline due to inflation.
Some are interested in exploring day trading (buying and selling in the short-term) because they think it's fun and challenging.
The first step is to understand the different types of financial instruments.
Stocks: The most traditional form of investing. Essentially, you purchase a “slice” of a publicly-traded company, like Apple or Tesla.
Bonds: A loan to a company or government. When you buy a bond, the company or government uses that money and pays you back with interest. It's one of the least risky investments — but also offers a lower reward.
Mutual funds: A collection of stocks sold as a single unit. If choosing your own stocks to invest in sounds difficult — or risky — mutual funds might be the way to go.
Exchange-Traded Funds (ETFs): Similar to a mutual fund in that it is a group of securities designed to track a specific type of investment or index. May include stocks, commodities, bonds, and other investments. The main difference between a mutual fund and ETFs is that ETFs are traded directly on the stock exchange.
Index funds: A collection of funds designed to track the overall movement of the market. It is a mutual fund, but it is passively managed — no manager is taking the time to pick and choose stocks. As a result, the fees tend to be lower.
Commodities: An investment in raw materials, such as lumber, orange juice, gold, or silver. Commodities are often combined with other investment types to diversify overall holdings.
These are the most common types of investments, but additional types of investments include options and CEFs (closed-end funds).
4 Apps for Easy Investing on the Go
Looking to get into investing, but aren’t sure where to start? Let’s take a look at four apps that make it easy to get into investing — right from your phone.
Acorn is a full-service investment app that helps investors manage their checking, retirement, and investments all in one place.
This app’s main draw is that it makes it easy to invest by putting your spare change into an investment account that you fully control.
Stash is a low-cost investment app that focuses on “fractional shares” of stocks and ETFs. The lower barrier to entry makes it appealing to many beginning investors.
While it’s not ideal for serious investors who want to invest in things like gold, it can be a great place for starters.
Tastyworks is a new-ish US broker app that focuses on options trading. The app gets great reviews and offers a wide range of resources and educational materials to help investors learn more about options and invest and trade wisely.
It is worth noting that options trading is risky, so make sure you know what you are getting into!
Betterment is an investment app designed for socially responsible investing, especially for investors interested in ETFs.
The app features low fees, FDIC insurance on accounts (savings and checking), and assistance outlining and reaching your financial goals.
Ready to Get Started?
Investing isn’t only for the rich — it’s a primary way that low-income and middle class individuals accrue wealth. Short-term trading by contrast is highly risky, and only for those who are disciplined to take their time to learn the ropes. If short-term trading appeals to you be sure to use a free demo account first and explore TastyWorks. (Demo accounts enable you to place trades with “play” money.)
The apps we covered make it easier than ever to get involved in the markets from the comfort of your couch.