The word investing is a word that has the power to paralyze people from taking action. You know you should do it, but don’t know where or how to start. This post is meant to help you pull the trigger on investing and start you on the path to controlling your financial future. Investing can be simple and can actually be started with as little as $5.
Through technology and with the help of some creative businesses, anyone can easily access the markets and make trading decisions. Below are three companies that you can use to start investing without much money or pressure.
The secret to these companies is that they allow you to utilize the concept of fractional share investing and allow you to access the markets without the help of a traditional brokerage firm.
Is a company that allows you to invest the spare change of your purchases. The company has an app that can you download which allows you to connect all of your debit/credit cards and a bank account.
The Acorns app tracks all your purchases and calculates the amount needed to round the purchase up to the nearest dollar. Once all of the change recorded adds up to $5, they take the money out of your bank account and invest it in an ETF portfolio you previously selected. ETF = Exchange traded funds. ETF’s are traded like a company stock, however they are comprised of many different companies and therefore, offer diversification. (Don’t worry if these terms confuse you- we’ll be simplifying them in a later post)
Example – you connect your debit card to Acorns. You make a purchase at the grocery for $2.75. Acorns will round that purchase up to $3.00 and put 25¢ into your Acorns account. After several transactions, this will add up to $5.00. This $5.00 will be taken out of your account and used to trade based on what you selected when you first set up your Acorns account.
Acorns can be a good option for people who want to easily invest, without spending much time on the details.
It’s worthy to note that they are charging you a fee of at least $12 a year which is high. However, you wouldn’t be able to go to a brokerage house and trade with as little as $5 and no transaction fees.
Is a company that allows you to invest with as little as $10.
Loyal 3 does fractional trading which allows investors to buy shares of companies that they might not have been able to purchase at the full stock price. However, the trades are done in batches so your purchase price may vary between the time you put in the trade and when the trade is actually filled.
Example – you only have $10 to buy a stock and the stock you want to buy costs $100. Loyal3 will pool your money with others that want to buy that same stock. They will put the order in to buy the shares at a certain point in the day and if the price hasn’t changed, you now own 1/10th of a share of that stock.
Fractional investing allows anyone to own a piece of a company. Additionally, there are no fees for your trades on Loyal3. Currently, the company only allows you to buy around 70 blue chip stocks (big companies) such as Apple, and do not have ETFs, mutual funds, or bonds available for purchase.
If you are a little more investing savvy and want another option, Motif could be a good bet.
Motif allows fractional share investing for stocks and ETFs. They are not commission free, but allow you to do things you couldn’t do at a traditional brokerage house. You can actually invest in or create Motifs (portfolios) that align with your values.
Example – you are not sure what stocks to buy, but you are a fan of environmentally conscious companies. You can do a search in Motif for a “motif” that invests in companies that are environmentally friendly.
Motif is for the person that is more active in trading and wants to be more hands on with their investment decisions. There is no account minimum to start investing in fractional shares and ETFs, but you it will cost you $9.95 in fees to buy motifs.
All of these are interesting companies that we encourage you to know more about. As we come across more interesting investment platforms that make investing easy, we will post them on this site. Please let us know if you have used any of these platforms or will use them. We would love to hear from you.