Investing used to be a sport for the wealthy and well-connected, but that has changed. Digital innovations in the world of buying and selling stocks have made investing easier and more affordable than ever. But if taking the first step toward investing in stocks intimidates you, we’ve got you covered. Here are the cheapest (and easiest) ways to invest in stocks, with quick links at the bottom of the article.
Robo-advisors are really the best choice for investment newbies. These algorithm-based services remove the guesswork by choosing the best investments for you. A robo-advisor will ask you a few questions about your goals and your risk tolerance, before placing your money in a highly-diversified portfolio of stocks and bonds. Additionally, the algorithms will frequently rebalance your portfolio to make the most of your investment.
Wealthfront is a great option if you have at least $500 to invest. Like most robo-advisers, Wealthfront will charge a small fee on your investment, though at a low 0.25%, it’s a pretty good deal given that a standard cost is as much as 2%. Plus, it will manage your first $5,000 for free.
And if you don’t feel like dropping $500 on a starting balance, M1 Finance offers another option. They charge no commission or management fee and their minimum starting balance is only $100.
Low-Cost Beginner Apps
If you’re interested in buying specific stocks, but you don’t have a lot of money to spend, there are tons of options that charge a $0 commission.
Public is a user-friendly app that lets you spend whatever amount you want on “slices” of a share. That’s to say, you can buy a small portion of stock in a company you like, even if you can’t afford the full share. There are no commission fees or balance minimums.
Another good option is Robinhood, an app literally built for beginners. Of course, that ease-of-use recently got the app in some hot water as everyday buyers started crazy investing in GameStop, but that’s another story. One of the best (and less scandalous) perks is that Robinhood will give you one free stock just for signing up. While it does not automate investments like a robo-advisor, Robinhood makes buying and selling a quick and fun activity, all while teaching you the basics of the stock market. They have even started offering cryptocurrency investment options.
Employer Retirement Plan
If you’re still nervous about investing in the stock market, one of the best ways to start is through your employer. A 401(k) will allow you to put a fraction of your monthly income into retirement savings and the amount you put away can be controlled each month. That means you can start by adding 1% of your income into the 401(k) until you feel more confident. Plus, many employers have a matching policy, which means they will add money into your retirement account for every dollar you put in yourself.
Worried about losing part of your monthly income? When you contribute to a traditional 401(k), your contributions are pretax. That means the money is taken off the top of your gross earnings before your paycheck is taxed, so you likely won’t even notice it’s being deducted.