Stock investing for dummies
Investing is risky. It comes with few guarantees.
Legendary founder of Vanguard, John Bogle, once said, “The grim irony of investing is that we investors as a group not only don’t get what we pay for, we get precisely what we don’t pay for.”
The only investing guarantee I can offer is this: everything held equal, the less you pay in fees, the better your returns.
Thankfully, we live in the 21st century, and there’s never been a better time to be a small investor. Fees don’t have to stop you from making wise and lucrative investments.
And now, in today’s mobile world, investing is becoming easier and cheaper than ever.
These are the top five investing apps that let you invest for free (yes, free).
1. Fidelity – Free ETF Trades & No Minimum IRA
Fidelity is our #1 favorite app that allows you to invest for free. This surprises most people, because most people don’t associate Fidelity with “free”. However, Fidelity offers a range of commission-free ETFs that would allow the majority of investors to build a balanced portfolio.
Fidelity IRAs also have no minimum to open, and no account maintenance fees. That means you could deposit just $5, and invest it for free. That makes this a much better deal compared to companies like Stash Invest.
But to make it the #1 app, it has to have a great app, and Fidelity does. There app is the cleanest and easiest to use out of all of the investing apps we’ve tested. They have a ton of features, but it all works well together.
Plus, you get the benefit of having a full service investing broker should you need more than just free. Check out Fidelity’s app and open an account here.
2. TD Ameritrade- Free ETF Trades
If you’re set on cutting fees while maintaining a well diversified portfolio, you’ve probably discovered Exchange Traded Funds (ETFs). ETFs maintain a tax advantaged structure, and they usually carry lower fees than equivalent mutual funds. But, most brokerages charge you to buy and sell ETFs.
Not so with discount broker TD Ameritrade. TD Ameritrade offers over 100 commission free ETFs from industry giants iShares, Vanguard and more. Because of the diversity of no load ETF funds, TD Ameritrade is my top broker for people who want to consider tax loss harvesting on their own.
Furthermore, TD Ameritrade also have no minimum and no maintenance fee IRAs. That makes it a better pick to options such as Acorns, which charge maintenance fees.
TD Ameritrade’s mobile app also offers research, information and portfolio analysis that make the free investing that much sweeter. Just remember, TD Ameritrade charges for some ETFs, mutual funds, and equity trades. Filter for no load ETFs before you buy.
It’s app also isn’t as user friendly as Fidelity’s but we put them as a very, very close second.
3. Robinhood- 100% Free Stock Trades
Robinhood is the only app lets you buy and sell stocks for free. Users can buy or sell stocks market price. The app allows you to make limit orders and stop loss orders too. Unless you’re an active trader, this is plenty of functionality. Plus, the app comes with a clean user interface, and basic research tools.
Most serious investors should pair Robinhood with one or more free research tools. This will help them develop a more systematic approach to investing. That said, you can’t be Robinhood’s free trades, but it’s shortcomings here make it third.
If you’re curious how Robinhood makes money, it’s through Robinhood Gold. Robinhood Gold is a margin account that allows you to buy and sell after hours. Buying on margin means you double your expected returns. It also means you double your expected losses. The result (based on the magic of compounding) means that trading on margin tends to eat into your principal.
Check out our full Robinhood review.
4. Vanguard – Commission Free Investing
Vanguard is consistently known as the low cost investment service provider. They were one of the original mutual fund and ETF companies to lower fees, and they continually advocate a low-fee index fund approach to investing.
A Vanguard, you don’t pay any commissions when you buy and sell Vanguard ETFs. You also pay no account service fees if you sign up to receive your account documents electronically, or if you’re a Voyager, Voyager Select, Flagship, or Flagship Select Services client.
Vanguard also doesn’t have an account minimum, and there is no minimum purchase requirement, except the cost of 1 share.
What holds Vanguard back is that their app is a little more clunky that the other apps. It feels a little “old school”, and it seems to be built for the basics only.
However, it is free, so maybe only the basics are needed?
5. Wealthfront- The App That Manages $15K For Free
If you’re a beginning investor who doesn’t have time to research investment opportunities, then a “robo-advisor” could be a perfect investment solution for you.
Wealthfront will manage your first $15k for free. After that, they charge a .25% annual investing fee.
The Wealthfront app helps you monitor your contributions, and the app allows you to make projections about wealth accumulation and withdrawal. It also offers basic education on asset allocation, tax loss harvesting and other important investing concepts.
This is the only robo-advisor to make the list, and it isn’t truly free after $15,000 in assets under management. However, that’s still a good runway to build up to for free.
There are a lot of apps and tools that come close to being in the Top 5. When the competition is so good, it’s hard to make the cut.
Charles Schwab also offers commission free ETF trades, similar to Fidelity and TD Ameritrade. In fact, Charles Schwab advertises that they offer more commission-free ETFs that most other companies, and they even offer some commission free mutual funds.
However, what keeps Charles Schwab out of the top is that they have a $1,000 account minimum for almost all account types.
E*Trade also offers a large selection of commission free ETFs. We are actually big fans of E*Trade for our solo 401k account, but they don’t make the top 5 when it comes to investing apps and free investing.
While they do offer IRAs with no minimums, and charge no transaction fees, we didn’t find their app as user friendly as the rest. Similar to their website, it’s just a bit harder to use. However, we still really like E*Trade and they are definitely a runner up.
WiseBanyan offers absolutely free asset management.
If you opt into their automation program you’ll pay a 0.02% fee each month (prorates to a 0.24% fee). The fee maxes out at $20 per month. In a year or two, WiseBanyan may leap to the top of the list, but the company doesn’t allow enough customization for users today.
Have you ever heard of any of these investing apps? Which one is your favorite?
– stock investing for dummies