This is a list of 5 of the best websites to use to start investing as a beginner. They are all very similar but still different in their own unique ways. Some of them are robots-advisors, meaning that the site picks your investments for you. Some give you more freedom to choose specifically what you want.
CapitalOne Investing* is the first site (brokerage firm) that I chose to use when I began investing. This site’s investment products include individual stocks, ETFs, Mutual Funds, and Options. If you’re looking to choose what you want to invest in on your own, this is the place for you. Unlike many of the bigger brokerage firms, CapitalOne Investing allows you to open an account with no minimum balance. You don’t have to deposit some crazy amount like $10,000 into your account to start investing. Also, they offer very competitive commission fees when trading stocks at $6.95 per trade.
The “no minimum balance” policy and competitive commission fees are what attracted me. However, if you choose this site, I would advise you to invest in their No Transaction Fee (NTF) mutual funds. NTF mutual funds allow you to invest without paying those initial commission fees which will prevent the fees from cutting into your earnings. This site also has several tools that allow you to do things like setting up automatic investments and automatically reinvesting your dividends to buy partial shares of stock. Reinvesting your dividends allows you to take advantage of compound interest.
*By using the CapitalOne Investing link above to open and fund an account, I will receive $20 and you can receive anywhere from $50-$600 depending on how much money you deposit initially
Acorns* is a robo-advisor, meaning that it does all of the work for you. You provide them with details such as how much risk you want to take and how long you plan to invest for, and they tell you what you should be investing in. I love this aspect of Acorns, especially for beginners. It’s a very hand-off approach to putting your money in the market. With that, you can start investing with as little as $5! And that’s not all! It’s free for college students with a .edu email address for up to four years after registration!
If you’re not convinced by now, there’s still more to convince you. They offer this “Round Up” tool that allows you to link your debit and credit cards to your account. When you make a purchase for say $2.50, it will round up your purchase to the nearest dollar and invest the difference. Your $2.50 purchase will be rounded up to $3 and that extra $.50 will be added to your account to be invested. I love this site/app because it allows you to invest effortlessly and it doesn’t require huge deposits.
*By using the Acorns link above to open your account, Acorns will deposit $5 into your account as well as mine
Stash is similar to Acorns in that it allows you to begin investing with only $5! However, it’s different because it allows you to choose what you want to invest in. It gives you a list of conveniently nicknamed ETFs to pick from and you select what YOU want to invest in. Stash will provide you with the tools, tips, and guidance to teach you how to invest on your own. It only costs $1 a month to invest with them if your account is worth less than $5000 and it costs .25% of your account balance per year if your account is worth more than $5000. Stash also offers Stash Retire, which allows you to contribute to a Traditional or Roth IRA.
Betterment* is very similar to Acorns because it is a Robo-Advisor. However, the tools that it offers, in my opinion, are better suited for those who plan on investing more than just pennies on the dollar. Betterment is a better fit for someone that is looking for a robo-advisor and has a consistent stream of income. Acorns, again, in my opinion, is better for your typical college student or someone that wants an almost completely hands-off experience. Betterment offers services for regular growth as well as retirement. Betterment does not require a minimum balance to open an account and charges .25% of your account balance per year to manage your money.
*Using the Betterment link above to open an account will provide you with 90 free days with Betterment and will provide my mom’s account with 30 free days
Robinhood is very similar to CapitalOne Investing because you choose what you want to invest in. However, they do have one very cool feature. All trades on Robinhood are commission-free, meaning that you don’t have to pay that $7 fee every time that you want to trade a stock. They are able to do this by cutting costs. They don’t have physical stores or run super expensive marketing campaigns. However, one of their common complaints is their lack of customer service. If something goes wrong with your money on the site, it’s hard to get a hold of someone that can fix your problems. Therefore, them cutting back on costs can be a gift and a curse.
My suggestion would be to use this site while your portfolio balance is fairly low. Once your balance gets higher, I’d encourage you to switch to a brokerage firm like CaptialOne so that you don’t lose your money due to a system malfunction. It’s hard to get that money back if you can’t get in touch with customer service.