For young folks looking to earn financial independence, investing effectively is a major stepping stone in the fulfillment of their goals.
No matter how much money you have for kickstarting your investment path – be it a few bucks or a windfall of an amount, you need the right investment accounts for your needs. The truth is that the right investment account will vary depending on the individual and their specific needs. It is essential to ask here what your goals are and if you are looking to conduct continuous management of your account or merely want to buy and hold for decades.
You should sit down and ask yourself about your specific goals and how hands on you want to be as you begin your investment journey.
That is why we have our guide below that goes over the most reputable investment accounts for young investors. So, let’s begin!
Are you new to investment accounts? Worry not, Wealthfront has got you covered. Its low fee and fully automated system make it ideal for starters. Moreover, you can get started for only $500.
As you gain experience in investing, Wealthfront grants you a certain degree of personalization. For instance, you can add or remove vetted ETFs to and from your portfolio as you like. Categories, like Technology ETFs, Healthcare ETFs, Cannabis ETFs, and more, would also become available to you.
Furthermore, Wealthfront also allows you to indirectly invest in crypto as well. You can allot up to 10% of your portfolio to a couple of crypto trusts, namely Grayscale Ethereum Trust (ETHE) and Grayscale Bitcoin Trust (GBTC).
When it comes to trading free of charge, you have got only one option: Robinhood. Besides its commission-free investing, Robinhood is easy to understand and use, making it ideal for novice young investors. On top of that, you can get started for only 1 buck!
With Robinhood, you can deal in stocks, mutual funds, ETFs, and cryptocurrencies.
The main highlight of Robinhood is its fractional shares. While other investment accounts only allow you to buy a minimum of 1 share of a company, with Robinhood, you can buy even a fraction of that single share as well. For instance, if 1 share of the company, Apple, costs, say $500, you can buy a fraction of it for any amount less than $500.
Today, saving and investing money can be really difficult for people due to the high cost of living. For most people, there never seems to be enough money to save once you have paid off your bills. That’s where Acorns comes in.
Today, saving and investing money can be rather difficult due to the high cost of living. For most people, once the bills are paid it seems like there just isn’t enough money to actually squirrel away some savings. That’s where Acorns comes in. Acorns has built a system that uses micro-investments to build your savings and investments. And all it takes is your spare change. Signup takes less than 5 minutes and once you’re a member, you get investment accounts for you and your family, plus checking, retirement plans, and more for as little as $3 a month. Start saving now and invest in your future.
If you want to learn day trading, then getting a brokerage account with Interactive Brokers is your best bet.
Interactive brokers allow you to leverage sophisticated trading software if you choose to day trade. However, the commission varies according to the specific trade. Normally, it charges 0.005 per share on trades with a minimum of $1.
Furthermore, Interactive Brokers connects you to markets in over 100 countries and with its Workstation trading platform, you can easily test theories and analyze stocks.
For young investors interested in mobile trading, there is no better option than E-Trade. The dominance of E-Trade in the mobile category has largely been credited to the Power E-Trade application.
Power E-Trade combines more than 100 technical indicators and analysis tools with real-time data. You can trade stocks, mutual funds, bonds, and options – all from your mobile phone. In addition, the LiveAction tool of Power E-Trade is a potent market searching tool that allows investors to sniff out extraordinary volatility and disruptions.
E-Trade has another mobile application, which allows you to conduct basic functions. It is recommended for beginners.
Nonetheless, the commissions in E-Trade are relatively higher than the other brokers on our list. It is important to mention here that E trade does not charge commissions most transactions.
Are you looking to dabble in some serious cash? If so, choose Vanguard as your broker.
Besides allowing you to invest in more than 200 different commission-free ETFs and mutual funds, Vanguard provides $500,000 insurance for each of its customers’ accounts.
More importantly, if you want to make an investment of at least $50,000, then upon the deposit, you would qualify for Vanguard Personal Advisor. Speaking of, it has certain perks, such as no-cost annual checkups, automatic quarterly rebalancing, and video calls with Vanguard’s financial advisors to assess the progress of your investment goals — all for only a 0.30% management fee.
Backed by the data and research provided by its affiliates, TD Ameritrade is arguably the best trading software available in the market.
Having a TD Ameritrade brokerage account allows you to access various market research agencies, including The Street and Morningstar. Furthermore, from bonds and stocks to currencies and commodities – it allows its users to track just everything.
Although the commission fees of this broker are high like E-Trade, there is a range of commission-free ETFs available for account holders. Remember that as the industry has gone the way of zero commissions, TD Ameritrade has followed. One critical point to think about here is that TD Ameritrade does not charge for many trades but may do so for certain types of trades, like foreign purchases or other select circumstances.
For passive investing, young investors can opt for the M1 application which continues to grow in popularity.
Assuming that you are not familiar with the term, ‘passive investing’. Well, it involves creating portfolios that require little or no active supervision. You’d normally just create them and forget them. However, depending upon your varying income, wealth, and risk tolerance, you may need to occasionally tweak it. Although it doesn’t seem like it, passive investing can be a successful investing strategy.
The unique Pie-building tool of M1 is what makes it effective in the eyes of passive investors. The Pie here is your portfolio, while its slices represent the firms that you’re interested to invest in. Whenever you deposit cash into the pie, it gets distributed equally among all the slices.
People appreciate M1 because the have not had too many problems with it and because it offers a compelling array of opportunities.
The company says that it is a finance super app. It does so because it notes that you can invest, borrow, and spend with one application. People who are into cryptocurrencies would be happy to know that the firm will roll out a crypto currency option very soon.
Yes, it is commission free, it does offer compelling customization when it comes to your investing, it enables you to spend with a checking account and respective card, and it also has a credit card that offers impressive perks! The credit can offer up to 10% cash back, you can reinvest that cashback, it will come with an annual fee that is waived with an M1 + membership.
Did you know that M1 also offers margin loans for accounts that have at least $2,000 invested in it? The funds are available very quickly to to your respective M1 accounts and wait times of 1-2 days for those that are looking to transfer to external bank accounts. The interest can be 3.5% or a little higher for non M1+ members.
It costs $125/year but it can certainly be worth it. Remember, you do not have to get an M1 + membership to enjoy the fundamental benefits that M1 offers, M1 provides many different perks that can certainly be beneficial.
A Few Points to Remember Before You Begin with Your Investment Accounts
Most experts note that the most individuals should be hands off with regard to their investment accounts because too much buying and selling can produce low returns.
This is because low returns tend to come from taxes paid out, also because of the mistakes made due to frequent movements, and other factors that affect excessive active investing.
Do you want to spend a lot of time learning about each company and the different factors that could go wrong? Are you interested in dedicating more than ten hours a week for your investing endeavors? If not, then you should allocate a majority of your investing to index funds and ETFs.
Then, if you love a specific company or stock, and see that they are profitable or have the ability to quickly grow, or have some special insight into the company, you can buy that company for a little more.
Are you ready to start with your investment accounts? If not, ask questions about investment accounts below and we’ll make sure to answer them.
Disclosure: This post may contain affiliate links, meaning we get a commission if you decide to make a purchase through my links, at no cost to you. For more information, see our disclosure here.
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