Make Investing Simple Whether you’re putting away your first $1,000 or have been saving for the future for years, you’re going to want to consider investing your funds at some point. Doing so will allow you to maximize returns and exponentially grow your savings. Unfortunately, the investment process can be pretty intimidating, especially if you are starting out on your own. It’s hard to know how to begin, where to invest, how to balance your portfolio and even what sort of fees you should expect to pay along the way. That’s where the convenience and ease of today’s best investment apps can come into play. What Are Investment Apps? Once upon a time, your only choice for investing was to pick up the phone and call your stock broker to initiate a trade. You were charged for the service, either based on commission or as a flat fee per transaction. While stock brokers are still an option, you can take investing into your own hands these days, without ever needing to talk to another human. And it’s all thanks to investment apps and platforms. Today’s apps offer a range of services and features. With them, users can: Research funds and individual stocks View fees and expenses related to investment choices Invest funds on-the-go, and even automate regular contributions Automatically reinvest earnings on current investments Adjust portfolio for personal risk tolerance View performance projections Choose funds or individual stocks that align with personal beliefs, through portfolios based on socially-responsible missions The best part? Investing through trusted apps is usually cheaper, faster and you’ll have instant access to your portfolio/reports at any time of day. Not only that, but you’ll also be able to set your investment risk tolerance, rebalance your portfolio and even reinvest earnings automatically. Who Are Investment Apps Designed For? Whether you’ve been playing the market for ages or are ready to invest your first $100, the right investment app is worth considering. For those new to the stock market, apps will simplify the process and put the power of investing at your fingertips… literally. From your phone or computer, you can easily see portfolio recommendations based on your own goals, savings plans and even risk tolerances. The right app will tell you up front how much you can expect to spend in fees throughout the year, and can even allow you to automate many of the more confusing aspects, such as picking well-performing stocks or even rebalancing. While investment apps are ideal for beginners, newbies aren’t the only ones who will see the benefits. Even seasoned investors will find the process easy to use, and may even learn that these platforms can maximize returns (and save them money in fees) along the way. Not to mention, many investment apps offer additional insight into specific funds, so you can choose to invest in companies that align with your own passions and beliefs. Now that you know why you should consider using an investment app for your own savings, let’s take a look at some of the best ones available today. Best Investment Apps Great for Beginners: Acorns Fees and Expenses: For investors with less than $1 million invested, fees are between $1-3 per month depending on the account option you choose. Acorns is also free for college students. Beginning Investment Requirement: At least $5 to start Types of Investments Available: ETFs (exchange-traded funds) Portfolio Options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes If you want an easy, hands-off approach to investing that won’t leave your head spinning, Acorns is a great first choice. This app not only simplifies investing for beginners, but allows investors to completely automate the process from start to finish. After connecting the app to your debit card, the app will “round up” each of your daily purchases, putting the savings into an investment holding account. Once you reach the minimum required, Acorns will invest this money on your behalf, based on your account preferences. The app will also reinvest your earnings, as well as rebalance your portfolio when necessary. [youmaylike] Great for Truly Free Investing: Robinhood Fees and Expenses: Robinhood is a free investment platform in every sense of the word, pledging to never charge company fees or commissions to customers. Beginning Investment Requirement: You’ll need $2,000 to get started Types of Investments Available: ETFs, stocks, cryptocurrency and options Portfolio Options: Interest-based options such as Fashion ETF, Tech ETF and Energy ETF, as well as a standard S&P 500 ETF, all with personal risk tolerance settings. You’ll also find “collections,” which are individual stocks grouped according to specific interests — such as companies with female CEOs or that are in the social media sector. Automatic Investing?: No Automatic Reinvesting?: No Automatic Rebalancing?: Yes A great option for beginners and experienced investors alike, Robinhood makes the process both easy and affordable. How affordable? Well, it’s entirely free. By offering a truly free experience, Robinhood saves investors some serious cash over time. Additionally, the platform makes it easy to choose individual stocks or ETFs based on personal interests. If you want to invest in cryptocurrency or options, you can also do so through Robinhood. One of the biggest limitations of the platform, though, is its automation. While you can set up automatic deposits into your account, you will need to manually invest those funds and then reinvest (or withdraw) your dividends. Stash Fees and Expenses: $1 per month fee for those with less than $5,000 invested, or $2 per month for retirement accounts with less than $5,000. For users under 25, fees on retirement accounts are waived. If you have more than $5,000 invested, your fee will be 0.25% annually. Beginning Investment Requirement: You’ll need at least $5 to begin investing (fractional shares are available) Types of Investments Available: ETFs (exchange-traded funds) and fractional stock shares Portfolio Options: Too many to name, ranging from things you Want (portfolios that are conservative to aggressive mixes), things you Believe (such as groups of companies that believe in clean energy, LGBT rights, etc.), and things you Like (tech, retail and social media companies). Automatic Investing?: Yes Automatic Reinvesting?: No Automatic Rebalancing?: No The closest competitor to Acorns, Stash seeks to make investing easy for everyone, regardless of your goals and passions. They have three account options to choose from, allowing you to manage your investment and retirement accounts, or even a child’s education savings through custodial accounts. With Auto-Stash, you can set any number of automatic investment options and transfers. However, Stash will not rebalance your portfolio for you, nor will they reinvest dividends on your behalf. Wealthfront Fees and Expenses: 0.25% annually Beginning Investment Requirement: $500 minimum initial investment Types of Investments Available: ETFs (exchange-traded funds), individual stocks, retirement accounts (401k, IRA), 529 savings plans, trusts Portfolio Options: 11 asset classes to choose from, including natural resources and real estate Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes Wealthfront’s investment platform is designed to be friendly for users of all experience levels. If you’re a seasoned investor, you’ll enjoy all of the options available to you, including the ability to manage your retirement accounts, education savings, and even non-profits or trusts. If you’re a newbie, their free financial expertise center is the perfect place to learn all about investing and your future. TD Ameritrade Fees and Expenses: The managed, automatic portfolio investment option (called Essential Portfolios) is available with a 0.30% advisory fee Beginning Investment Requirement: $5,000 minimum for managed portfolios (no minimum requirement for traditional trading) Types of Investments Available: Stocks, ETFs, options, mutual funds, futures, bonds/CDs, Forex, cryptocurrency Portfolio Options: Essential Portfolios (EP) offer investors a range of options from Conservative to Aggressive, based on your individual passions, preferences and tolerances Automatic Investing?: Yes, with EP Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes A more traditional brokerage app, TD Ameritrade is one of the most recognizable names in the industry. You can easily educate yourself on all things financial, thanks to their free videos and posts. If you want a traditional experience, you can choose your trades and pay per transaction. Prefer a more streamlined, automated approach? Opt for their Essential Portfolios, a hands-off investment option (robo-advisor) that charges a flat monthly fee and requires little-to-no oversight from you. Plus, their app makes the investing process easier than ever with a user-friendly interface, price alerts and no minimum to get started. If you prefer a desktop experience, this is also available to you through TD Ameritrade. Bottom Line Getting started with investing can be intimidating. With all of the terminology and account options out there, it’s easy to want to run and hide. Thanks to some of today’s best investment apps, though, you can not only get started with your first portfolio but also watch your money quickly grow… no matter how much of a beginner you may be! It’s important to choose an app that offers you the portfolio options and features you want most, with fees and deposit minimums that match your financial needs. The five apps above are our favorites for beginners, making that first foray into investing easier than ever before. The hardest part will be choosing the one you love most!
Which Route Will You Take Come Tax Season?
Tax preparation is a necessary, but sometimes complicated and borderline painful, annual task for most Americans. Some will take all of their records to a tax preparer, while others will attempt to file on their own or through online software or another similar service.
eFile.com, an authorized IRS e-file provider, reports that more and more people are filing their own taxes each year, instead of using tax professionals. Roughly 56 million people filed their returns as “self-prepared” for the 2018 tax year. However, still another nearly 72 million people utilized a tax professional to have their taxes completed.
Many people choose to use online software, free tax preparation services like VITA or TCE, or have friends or family do their taxes instead of utilizing a tax professional for the simple reason that it saves them money. Tax preparation services can be very costly. Even if you have a relatively simple tax return, professionals can still charge hundreds of dollars to do your taxes for you.
However, using a tax professional helps ensure you are taking full advantage of available deductions and credits, and gives you a helpful go-between with the IRS if there are any problems or concern areas. They can also answer any questions or concerns you may have about your return.
Even with all of the benefits that tax professionals provide, is the cost worth it? Do tax preparation services add that much value?
What Are Tax Preparation Services?
Tax preparation services are more than just using tax software like TaxCut or TurboTax. It involves actually speaking to a human to have your taxes done. This can be through a tax attorney, tax preparation company (like H&R Block or Liberty Tax Service), or local tax professional firms that employ CPAs and other similar professionals.
In general, the tax preparation process with a tax professional uses the following steps:
- Gather all of your supporting documents for your taxes, set up an appointment with your tax professional, and go in to talk through your tax situation.
- The preparer will work through your tax forms on your behalf.
- The preparer will contact you if they have any questions about the documentation you provided or if they are missing information as they go through the process. They may also reach out to discuss potential options for tax savings that you might not have noticed.
- Once the return is prepared, your preparer will often set up another appointment to go through your draft forms with you.
- Once you have approved the form and signed off, your tax preparer will file your tax forms on your behalf.
Your tax professional will sometimes pay the filing fee for you as part of their overall service fee or charge it back to you as part of their final bill.
Tax professionals often charge for their services at a flat-rate fee. The fees vary a great deal from person to person because they often depend on how complicated your tax return is and how much time it will take to prepare. In many cases, a tax professional cannot tell you for certain how much preparing your taxes will cost until after the process is completed. They may be able to give you an estimate, but these are not always accurate.
Using a tax preparation service varies from using a tax preparation software because you have a live person actually doing the preparation for you. When you are using tax software, you are going through the process of preparing your return yourself.
When Do I Need to Use a Professional to Do My Taxes?
There is really no easy answer to this question. In short, you are never required to hire a tax professional. You can always prepare and file your taxes on your own. However, in some circumstances, having a professional look at a complicated tax situation is a good idea to avoid the time, hassle and potential for costly mistakes.
You should think about the following questions as you consider whether getting a tax professional is a good idea for you.
Are You Unsure About What Deductions, Credits and Other Benefits You Should be Taking?
Perhaps the number one reason people retain professionals is that they are not confident in their ability to do their own taxes. They may have no idea where to start, or they may simply be unsure of which tax benefits are available to them. Getting a tax return wrong has stiff penalties, including suffering through an audit and paying penalties and interest on any underpayment of taxes.
A tax professional does this type of work literally every day, and having that experience is extremely helpful. They also have tools and resources available to them that the average person does not.
If you are not confident or comfortable going through the process on your own, having a professional may be a good idea. They can also provide insights on tax savings that you did not realize were available to you.
You Do Not Have Much Time to Devote to Preparing Your Taxes
Doing your own tax preparation takes time. This is especially true if you do not have a base-level understanding of how taxes work or what savings might be available to you. You need to educate yourself about your options at the outset, and that is a time investment.
Once you teach yourself, however, that information will stay with you from year to year, and the process will get easier. Nonetheless, tax laws change, and you must familiarize yourself with the new requirements as they are altered each year.
If you do not have the time or energy to devote to this process, hiring a tax professional may be a good idea for you.
Are You Interested in Taxes, Curious or Willing to Learn?
Some people are genuinely interested in taxes and the tax process, and preparing their own taxes is interesting for them. They may also like the control and in-depth level of understanding their own finances that comes along with tax preparation.
Others do not have this same curiosity and just want to get the process out of the way. Your personality will have a lot to do with whether you are willing to prepare your own taxes.
Are You Willing to Spend the Money on a Tax Professional?
Tax professionals provide a unique service, and that service can be costly. Very complex tax returns can cost thousands of dollars, while the average tax preparation fee is around $176, according to the National Society of Accountants (as of 2017).
These fees vary throughout the United States and based on your tax situation. If you have a sole proprietorship and need a Schedule C, for example, the average fee increases to $457. Taxes prepared on the west coast and in the New England region are also about $100 higher, on average, compared to those in, for example, the Midwest.
For some taxpayers, paying any preparation fee is simply not an option for their financial situation. For others, the idea of saving money generally pushes them to file on their own. Your individual situation will dictate whether investing in a tax professional is the right option for you.
While there are many benefits to using a tax professional, it is not an option for everyone. It may not even be necessary for many taxpayers. Ultimately, your personality, willingness to invest the time and effort, and tax situation will dictate whether using a professional is a good idea for you.