5 Millennial Investing Apps That Do A Lot With Little Effort
A long ago, in a time that seems ancient history, I started my first retirement account. I was in grad school. Determined to live well if I someday stop working, I started saving really early. Here's the deal. I'm a Gen Xer and totally mystified because I see that Millennials take a totally different approach. They do not save. They typically eschew financial management tools like those at Wealthry.
It makes sense to start saving as early in life as possible. When you put something away for a rainy day, as my dad used to say, you make life easier for yourself.
Many Millennials want to live well now. They focus on spending on experiences, gourmet and organic food while avoiding spending on tangibles and housing. Some may even crash at their parents' home rather than pay rent or buy a house. While the events of childhood influence each generation, the surroundings that influenced the millennial generation have caused it to avoid putting down roots and establishing ownership of the items that other generations consider common wealth markers - car, home, vacation home.
They do not collect - not stamps, coins or baseball cards. They do not invest - not mutual funds, bearer bonds or stocks. While their parents may be pseudo-experts on exchange-traded funds (ETFs), Millennials do not even invest in cryptocurrency. Typically, that is the generation older than them.
So, while the Baby Boomer generation plans for retirement, Millennials take a different approach, integrating the travel into their work life. Why wait to retire when they can travel now, living well in AirBnB rentals that require no lease and traveling on private planes booked through JetSmarter?
Someday though every Millennial must pay for themselves. They will need a home, transportation, medical care. That means needing to invest.
Your Guide to Best Millenial Investing Apps
Still, it seems tough getting the youngest generations to start investing. They do not seem to prioritize it, but a new series of millennial investing apps have found a way to encourage this group to build wealth without really trying. It is called rounding up. This process links the spending on a credit or debit card the Millennial uses to their investment account.
When they spend $2.12 at Starbucks for a venti Pike's Place or Verona blend, it rounds the expense to an even $3 and drops the change - the ¢88 into a millennial investing app account. This lets the individual spend as they normally would and still save money. Since it applies to every expense made on the specific debit or credit card linked, it adds up very quickly.
Micro-Investing Can Help
These mini-investing accounts in millennial investing apps also let the individual set up a weekly or monthly transfer from their savings or checking account. It can be as small as $5 or $10 and lets them get used to the process and learn the ropes of budgeting and investing basics while "playing with" a small amount of money. Of course, since Millenials spend A LOT, their change adds up quickly.
Choosing the Right Card
A Shop to Build Your Wealth
Live a Financially Stable Life
These micro-investing accounts in millennial investing apps work a lot like a credit card that pays you back one or two percent of your purchases each month. In fact, a millennial could make back even more money each month by choosing their cash back credit card as the one to link as the main card to their millennial investing apps. This lets them earn back a few percents of their spending plus invest their change.
If you use a zero interest rate card or debit card like the PayPal Business Debit card, you earn back one percent of your monthly expenses while investing your change. Since you pay no interest whatsoever, you only make a profit off of your necessary monthly expenses.
How to Invest
Now, the investing part of these millennial investing apps. These apps also teach you how to invest. Just like the investment accounts your parents or grandparents use, you will choose from a number of choices of investment funds in which to parlay the funds in order to grow them further. You can choose from conservative investment options like a money market fund or from high-risk investments such as stock market funds including ETFs that include cryptocurrency. It depends on how sure of a thing you want.
You can decide to grow your investment funds slowly at a guaranteed rate of return or you can choose a varying level of risk that does not guarantee a return on investment. In fact, you might lose the money you saved.
Typically, these millennial investing apps offer you a range of choices. You will have between three and five options that allow for conservative, low-risk to liberal, high-risk investments. Low-risk usually means a money market account that probably earns you about the same interest as a regular savings account. High-risk typically refers to ETFs that involve volatile stocks and crypto-tokens.
The third shared feature of these millennial investing apps is investment advice. They provide blogs, whitepapers, and tutorials on how to invest. They offer free wealth building and wealth management coaching.
So, by now you are chomping at the bit to get started, right? Who doesn't want to get rich? Even better if you can do it on the side, without a ton of effort. Now, it will not happen overnight using these millennial investing apps or any others. But, by using them over the long-term, you can help yourself build wealth.
How Much You Could Save
Let's look at how much you can save in a year using one of these millennial investing apps. According to The Penny Hoarder, in one year, you can feasibly save $500 by micro-saving your change. Combine that with the investment option, assuming a 12 percent annual rate of return. You can use an investment calculator to determine how much you will save. If you start at age 25 and save $500 annually - just $41.66 a month - by the time you hit 65, you will have saved more than half a million dollars. You would have $549,442.
Here is how that works. The 12 percent rate is the 30-year return of the Standard & Poor's 500.
This savings and investing option assumes that for 40 years you do nothing but save through the millennial investing app. That is just what you earn by saving and investing your change.
As long as you work for a company that pays Social Security taxes, you will also build an account there. When you reach retirement age, you will have earned a monthly check from the Social Security Administration. The amount varies according to how long you worked, the amount contributed and the age at which you retire. You could also receive an annuity or retirement payments from a retirement fund you start later. But, let's get back to how you amassed half a million dollars off of spare change.
You saved $500 your first year using an app like Acorns or Stash. You chose the mid-risk investment option. The next year, you did the same thing and so on. In year two, adding a fresh $500 to your existing $500 also meant you now earned on $1,000. In year three, you earned on $1,500 and so on. Eventually, you started earning 12 percent returns on $50,000, then $100,000, etc. As time passed, your nest egg grew and as you saved more money into it, it grew more quickly. Pretty soon, that sucker grew so fast, you thought about entering it in NASCAR.
It all starts small. The rounding from your coffee purchases for your workweek contributes $4.44 per week. After five weeks, you have $22 in your investment account. You are halfway to the monthly amount that gets you to retirement with an investment account valued at half a million.
Do you like those numbers? Let's look at five millenial investing apps and maybe a few bonuses that can get you there.
Acorns
Let me be straight with you. I am including Acorns because every article does and it needs coverage for the article to be complete. I do not recommend using it though. I try everything I write about here. I share genuine personal experiences. Acorns was the first micro-investing app I tried. It worked great until I tried to withdraw money.
Limited Number of Banks to Choose from
It uses the method of linking a credit or debit card for change rounding. I could only link my Paypal debit card because it would not accept my bank debit card. If that was not hinky enough, it only works with certain, specific, big-name banks. So long as your money sits in Citibank or another massive financial institution, you are good to go. But, if you do not use one of the few provided in their drop-down list, you are screwed.
I tried the option for adding an "alternative" bank and it did not work. So, if you use a hometown bank, an online bank or even a mid-sized regional bank or a credit union, you cannot link your bank account. You will be stuck with your Paypal only if you opened your Acorns using it.
Be Aware: You Can Only Withdraw to the First Account You Linked with Acorns
That created a problem since I had closed one Paypal. I had a personal one and a business one. I chose to close the personal one. The Acorns app let me switch to my other Paypal, but when I went to make a withdrawal, I could neither add my bank nor could I get money transferred into my newer Paypal account. Their customer support suggested I close the account which would result in a return of my funds to my Paypal.
Here is the raw deal. They sent the funds to the original Paypal I had used to open it, even though it no longer existed. You cannot simply get a check in the mail nor can you actually change or add an account. When you close your account or withdraw from it, it goes back to the account you used to initially open it. In my case, a closed account.
When I reported the problem to Acorns, they said I would have to take it up with Paypal to try to get them to recover the funds that had been sent into the Internet ether. So, while most sites tout Acorns as the best investment app for those who want to invest change, I do not. Your investment fund does no good if you can't access the money. Chances are good you will change banks over the course of 20 or 40 years. Heck, it may occur in the next year. You should not lose your money due to poor planning on the part of the millennial investing app.
Five Different Investment Portfolios
In Acorns, you have five diversified exchange-traded funds to choose from in order to grow your investment. You pay a buck a month for the minimum service level. You can start with $5. Expect your account to grow pretty quickly. When it reaches $5,000, you begin paying 0.25 percent of your account balance annually. Students with a .edu email address get four years of free use.
Stash
Stash has a similar fee structure of $1 per month for your account. It also lets you start with $5. It also transitions to a monthly fee of 0.25 percent fee when your account reaches $5,000.
More than 30 Different Investment Portfolios
This is a huge difference from Acorns. You can load all your investments into a fund specializing in clean energy, travel, cryptocurrency, fair trade, etc. Your investments can match your morals. You can focus on an industry rather than needing to choose individual stocks.
You choose how much money you want to invest every month. All trades in this millennial investing app are free. You can also open a Roth IRA using Stash. This is part of the Stash Retire feature. You can grow a tax-free retirement account with this feature.
Robinhood
You can start investing for free using Robinhood. It charges no fees for trades done during regular business hours, no maintenance fees and no trade commissions. You will pay $10 per month if you want to trade options or conduct after-hours trades.
It Is Mobile-Only
Robinhood is the only mobile-only option. This app provides no website, no blog, no advice. You need to know what you are doing and how to do it. You get to do it for free though. You can buy individual stocks with it.
The huge difference between it and the other millennial investing apps is that you cannot instantly invest unless you begin with an amount that lets you immediately purchase a stock. You cannot purchase fractional shares using it.
Clink
Clink uses the same fee structure as Acorns and Stash, so you will pay $1 a month to start. You transition to a fee of 0.25 percent once you hit $5,000.
Clink lets you choose from six Vanguard ETFs that offer varying levels of risk tolerance.
You can link your checking account and set up a monthly contribution or you can also have this millennial investing app withdraw a percentage of your connected credit or debit card purchases.
WiseBanyan (Now Axos Invest)
Axos Financial announced that WiseBanyan, the digital wealth management platform it acquired in 2019 has been rebranded as Axos Invest.
The cheapest option available for micro-investing, Axos Invest (ex WiseBanyan) remains free regardless of your account size. This means you can trade ETFs for free. You pay no monthly account fees or trade fees. If you tack on the optional tax-optimized investing add-on, you will incur a fee. That is the only fee.
You can start with $1. You choose your investment risk tolerance and the ETF portfolio that matches it. This app lets you purchase fractional shares like many of the other millennial investing apps, so you can begin investing with your first dollar.
Other Useful Millenial Investing Apps
Betterment
If you are new to investing, you might want to work up to Betterment which is technically a robo-advisor. You can start trading with only $1. It has no trade fees and a feature-rich platform.
This is probably the best personal finance app because it offers the most for the least. You set a transfer up for how much you want to spend on investing each month. You can also make one-time transfers. You choose an ETF portfolio and pay an annual account fee of 0.25 percent of your account value. It provides the following for that fee:
automatic portfolio rebalancing,
tax harvesting,
financial experts,
customer support.
Wealthfront Investing
Using Wealthfront, the millennial investing app remains free up to your first $10,000 invested. You have to start with $500 though, so you may need to work your way up to this one. It does not let you trade fractional shares. This offers the best long-term option since it lets you buy and sell stocks and you can use it as a robo-investing app.
Getting Started Micro-investing
You can find numerous opportunities for micro-investing online. Some apps work better than others. Some apps offer more for your money. Whether you are unbanked and using Paypal or earning a $50,000 annual income with a direct deposit to a Bancfirst checking account, you can use these apps to build wealth and plan for your future.
Besides giving awesome advice, Wealthry helps you invest, save and build your wealth. A savings account is something everyone should have (in our humble opinion) because this is something that sets you on the right financial path. If you’re considering opening a savings account, we have some suggestions for you. It’s quick, it’s easy and it’s good for you. What more could you ask. Check out these options below: