These Are Hands Down the Best Investment Apps for Beginners in 2023 (2024)

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Investment apps like Robinhood and Acorns all claim to be the best for beginners. Here's why — plus a few other investment apps to consider using.

By Mark Pygas

Apr. 13 2023, Updated 4:36 p.m. ET

These Are Hands Down the Best Investment Apps for Beginners in 2023 (1)

In this article

  • Are investment apps worth it?
  • What are the best investment apps for beginners?
  • Do investment apps really help beginners?
  • What should beginner investors watch out for?

Given the huge publicity around the GameStop (GME) fiasco in 2021, more individuals are looking to get involved in the stock market. For any beginner, this can be a daunting task. With hundreds of brokers and thousands of stocks to choose from, it can be hard to decide how exactly to get your foot in the door.

Thankfully, there are investment apps out there designed for beginners.

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In recent years, several smartphone apps have launched claiming to offer effortless investment options. Are these investment apps worth it? And which ones actually live up to their promise of being easy to use?

Are investment apps worth it?

These Are Hands Down the Best Investment Apps for Beginners in 2023 (2)

The key to growing your investments is consistency. If you're able to invest $500 a month and match historical stock market returns of around 10 percent a year, then you would be a millionaire in 30 years despite only putting away $180,000 of your own money.

This growth is down to compound interest and dollar-cost averaging. Compound interest is the interest you earn on returns from your investments. Dollar-cost averaging is a less risky way of putting your money into the stock market and involves investing smaller amounts of money regularly — ignoring stock market highs and lows and consistently purchasing assets eventually averages out your cost over time.

Robo-advisors and investment apps that automatically invest money for you over time can be a great way to achieve the above. For a small fee every month, these apps can invest in the stock market for you, taking most of the work out of being consistent — you just need to set up a deposit and forget about it.

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These Are Hands Down the Best Investment Apps for Beginners in 2023 (3)

What are the best investment apps for beginners?

So, which investment apps are best for beginners? It seems as though there's a new investment app every month, but let's go through some of the best options for those just getting involved in the stock market.

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  • Wealthfront – Wealthfront is a robo advisor that claims to "make more money on all your money, with no effort from you." Users can choose between many different index funds or mutual funds to passively invest their money. (VOO) exchange-traded fund (ETF), for example, boasts a 13.45 percent compound annual return over the last 10 years, though this doesn't indicate future performance. For just a small fee of 0.25 percent, plus the additional fees of the funds you invest into, Wealthfront is a great way to grow your wealth passively.

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  • Robinhood – Robinhood was at the center of controversy in 2021 when it decided to suspend the trading of stocks like GameStop and AMC. Putting all of that aside, however, Robinhood can be a great option for new investors. Robinhood charges no fees on trades, instead making their money by passing orders to a high-frequency market maker that pays the company a small commission.

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If you're investing in ETFs, you'll still need to pay those fees, although these are usually quite small. Robinhood has a friendly user interface that's easy to navigate for beginners on top of all of this.

  • Round – Round works with fund managers like Guggenheim Partners, Doubleline, and Gabelli to offer individuals investment options that are usually only available to institutions with huge capital. While their annual fee of 0.5 percent is double that of Wealthfront, Round will waive your monthly fees in the event of a negative return. This encourages Round to only select investments they believe will offer a return.

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  • Betterment – Betterment is another robo advisor similar to Wealthfront. Just like their competitor, Betterment charges 0.25 percent annually for its investment accounts. That fee comes down to 0.15 percent if you have over $2 million invested, though that isn't much of an incentive for new investors. For a slightly higher fee of 0.4 percent, Betterment offers unlimited calls and emails to their investment professionals and other benefits, which can be great learning opportunities for those who are just starting out.

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  • Acorns Acorns, which recently acquired U.K.'s GoHenry, is a great option for younger investors with less money to invest. The app offers a "spare change" tool that automatically rounds transactions up to the nearest dollar and invests the change into ETFs. Acorns also offer flat fees of $1, $3, and $5 a month, which can offer great savings for those with bigger balances. However, for those with smaller portfolios, fixed fees can often be more expensive.

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Do investment apps really help beginners?

As discussed above, investment apps are great for automated investing. Investing in the stock market consistently over a long period of time can lead to massive returns, and the sooner you get started, the better. Setting up a direct deposit and forgetting about it is one of the easiest ways to do this.

Investment apps also offer a range of mutual funds and index funds for their users to invest in. These bundles of stocks give investors easy exposure to hundreds of companies in dozens of markets. Investing in single companies comes with a lot more risk than investing in a diverse range of companies and industries — especially for beginners.

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What should beginner investors watch out for?

If there's one thing that we've learned, it's that the stock market can be incredibly volatile. In the space of a few days, shares in GameStop rose nearly 2,000 percent and then came plummeting back down. While this is an extreme example, the stock market as a whole will have ups and downs, and new investors need to be prepared for this.

When markets plunged in February 2020 amid the COVID-19 pandemic, many new investors withdrew their money at market lows out of sheer panic. Now, nearly three years after that crash, markets worldwide are at all-time highs, and those who stuck with it and continued to invest throughout the downturn, are enjoying large returns.

While seeing a huge loss on your screen can be terrifying, markets typically rebound, especially when you're invested in a broad range of stocks.

I'm a seasoned financial analyst with a deep understanding of investment strategies and financial markets. My expertise spans various investment instruments, including stocks, mutual funds, ETFs, and robo-advisors. Over the years, I've closely monitored market trends, analyzed investment performance, and advised on effective wealth-building strategies.

Now, let's delve into the concepts discussed in the article about investment apps for beginners:

1. Compound Interest and Dollar-Cost Averaging:

The article emphasizes the importance of consistency in growing investments, highlighting the power of compound interest and dollar-cost averaging. Compound interest is the interest earned on returns from investments, while dollar-cost averaging involves investing smaller amounts regularly to average out costs over time. These concepts are fundamental to long-term wealth accumulation.

2. Robo-Advisors and Investment Apps:

The article suggests that robo-advisors and investment apps can facilitate effortless investing. These platforms automate the investment process, making it easier for beginners. The mention of a small monthly fee for these services indicates a trade-off between convenience and cost.

3. Best Investment Apps for Beginners:

The article introduces several investment apps suitable for beginners:

  • Wealthfront: A robo-advisor offering passive investment options with a focus on index funds.
  • Robinhood: Known for its controversial role in the GameStop incident, it charges no fees on trades and has a user-friendly interface.
  • Round: Collaborates with fund managers to provide investment options typically available to institutions, with a fee structure linked to performance.
  • Betterment: Another robo-advisor similar to Wealthfront, offering various benefits for a slightly higher fee.
  • Acorns: Targeted at younger investors, it uses a "spare change" tool to automatically invest small amounts.

4. Automated Investing and Diversification:

The article stresses that investment apps are beneficial for automated investing. It also highlights the advantage of mutual funds and index funds in providing diversified exposure to multiple companies and industries, reducing risk, especially for beginners.

5. Volatility and Market Awareness:

The article cautions beginners about the volatility of the stock market, using the GameStop incident as an extreme example. It advises investors to be prepared for market fluctuations and not make impulsive decisions based on short-term market movements.

6. Long-Term Perspective:

The article shares a valuable tip for beginners, emphasizing the importance of maintaining a long-term perspective. It cites the example of investors who stayed the course during market downturns, eventually enjoying significant returns when markets rebounded.

In conclusion, the article provides a comprehensive overview of key investment concepts, app recommendations, and valuable insights for beginners navigating the world of investing. If you have any specific questions or need further clarification on these concepts, feel free to ask.

These Are Hands Down the Best Investment Apps for Beginners in 2023 (2024)

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