Understanding Online Brokers and Trading Platforms

There was once a time where the only place to buy stocks and other investments was Wall Street. Thanks to the internet, computers, and various new investment strategies, we can now buy and exchange investments from the comfort of our own homes. This can be accomplished through online brokers and trading platforms such as investment apps.

What Are Investment Apps?

Investment apps are dedicated platforms that allow you to invest in stocks, EFTs, bonds, and other assets via your computer or smartphone. Novice and seasoned investors alike can save money and enhance their portfolios by using investment apps. You can also use investment apps to get data such as stock prices, trends, and other relevant information for making well-informed decisions regarding your financial assets.

How Much Do Investment Apps Cost?

It’s common for investments to include fees. With these fees, financial institutions can stay operational and continue to provide you with their products and services.

Fortunately, online brokers have essentially done away with trading commissions. Investment apps seldom charge for basic transactions, and most allow you to start an account for free or with a small amount of money.

To use more advanced features, however, many still demand a certain amount of money. Stock and ETF trades are generally free of charge, although some brokers collect fees for mutual funds and trading options.

What Is Automation in Dividend Investing?

Dividend investing is a great way to boost your returns. This allows you to take advantage of compounding and maximize your long-term gains. Your dividends purchase additional shares, which raises your payout the following time, allowing you to buy yet more shares, and so forth.

Automated dividend investing can be achieved through Dividend Reinvestment Plans (DRIPs).  When a company pays out dividends, a DRIP automatically buys new shares of that firm’s stock, regardless of how often that dividend is paid out.

Although not all apps offer this lucrative investment strategy, it is a valuable feature to look out for.

What Are Investment Portfolios?

An investment portfolio is a collection of financial assets such as stocks, bonds, commodities, cash, and equivalents. You have the option of maintaining and managing your own portfolio or entrusting it to a financial advisor.

It’s critical to keep track of your investments regularly. However, this can be a challenging undertaking. Fortunately, some apps provide real-time data on all of your assets in one convenient location.

What Is a Robo-Advisor?

Robo-advisors use computer algorithms and data to deliver financial planning services that require little to no human involvement. For example, most robo-advisors gather client information via an online questionnaire and then utilize that data to provide recommendations and automatically manage client assets.

Popular Investment Apps

Considering some of the factors discussed above, such as fees, dividend reinvestment, portfolio management, and robo-advisors, here are some of the most helpful investment apps today.

M1 Finance

M1 Finance is a hybrid broker and asset management app, allowing for both self-service and robo-advised investing. This platform has a wide range of features, including commission-free investment, the opportunity to trade in fractional shares, and automated deposits.

Robinhood

Robinhood is among the best investment apps for those who prefer to do their own trading and pay little to no charges. Robinhood eliminates the majority of the costs often connected with investment apps by charging no fees and requiring no initial investment.

Ellevest

While all genders are welcome to register for an Ellevest account, the robo-advisor is targeted at women and managed by women. Ellevest is considered ideal for novice investors who are looking for guidance on how to begin investing and saving for the future or those with a particular goal in mind.

Betterment

Betterment is among the largest and most prominent robo-advisors. The app offers professionally managed portfolios based on various ETFs that are tailored to your risk profile. The app can also create socially beneficial portfolios, such as those focusing on environmental issues or social impact.

The Bottomline

Getting started with investing can be a daunting challenge. By understanding investment strategies and the different platforms available, you have a better chance of success. In this article, we have discussed the fundamentals of online brokers and trading platforms.

If you want to learn more about managing your investments and personal finances, check out our courses at Wealtheo™ today.