Not too long ago, there was a time when performing a stock trade for most average investors meant calling up your broker, putting in an order and then waiting while that broker passed the order along to someone on the frenzied trading floor who would then buy the shares for you.
Those days are long gone, though, as electronic trading and the internet have all but erased many of those old sources of friction in stock transactions. Today, you can easily trade stocks on just about any smartphone.
And although convenience is a big part of why mobile apps are so great for investing, the bigger benefit is actually the reduced costs. The removal of those various middlemen and choke points in the process has unlocked the ability for today’s investors to trade for free or very close to it.
Investing expert Joel Anderson weighs in about which trading app is best for you in the video above — and you can keep reading to learn more about which brokers offer the best trading apps for first-time investors and seasoned veterans alike.
Best Mobile Trading Apps
With traditional brokers still charging upwards of $6.95 or more per trade, opting to use a mobile app can greatly reduce, or completely eliminate, fees and commissions, which means you get to send more money to your nest egg as opposed to some unnecessary middleman.
Acorns is a micro-investing app that offers the unique feature of “round-ups,” which round up every purchase on a linked credit or debit card to the nearest dollar and invests it. The investing is handled by the platform’s robo-advisors that allow you to pick from a few options based on your level of risk.
Acorns’ fee structure, though, does make the micro-investing aspect of its platform less appealing. The basic app charges $1 a month. That might not seem excessive, but if you’re only relying exclusively on the round-ups, it could prove to be too much. An Acorns account with $600 in it is effectively paying the same 2 percent a year charged by top-tier hedge funds.
If you can make a large upfront investment, you might be able to access the round-ups feature without paying too much, but beware of relying on the round-ups alone: With the fees, it’s just not worth it.
Get Started: How to Invest With Acorns
Stash is geared specifically toward beginners. In addition to tools dedicated to helping you understand investing, the app organizes its ETFs around “themes.” The themes make it much easier for less-experienced investors to understand the sort of investments they’re making. And anyone can open an account with just $5.
However, the same caveat applies to Stash as it does for Acorns: The $1 a month flat fee might seem small, but if you do really start with $5 that comes out to 20 percent commissions — each month. That’s much more than anyone should pay.
If you can start with a decent chunk of change — the app shifts to a much more reasonable 0.25 percent rate once you hit $5,000 in your account — Stash could make for a good option. But if you really are looking for a trading app that lets you start very small, a flat monthly fee will most likely mean paying more than you should.
Robinhood distinguishes itself in one very particular way: It’s completely free to use. Robinhood has the potential to completely reinvent the broker model by giving away the basic service that brokers have been charging for years, and although it does charge for premium accounts or borrowing money to invest on margin, you can use the basic app without paying a dime.
The downside to this is that there’s less hand-holding, and you’ll most likely need to do your own research to select investments. But if you’re comfortable being a self-directed investor, there’s really no downside to Robinhood, and it could potentially save you a lot of money over most other online brokers.
SoFi — a company that until recently was primarily focused on refinancing debt — now offers investing through SoFi Wealth that charges no commissions or fees. Unlike Robinhood, though, SoFi offers robo-advisor services built on Nobel Prize-winning theories of portfolio construction to help minimize costs while — hypothetically — maximizing returns.
In exchange, SoFi charges a 0.25 percent management fee, but that is waived entirely for SoFi Loan customers and on the first $10,000 for everyone else. What’s more, the company has waived all fees for 2018 and offered free access to a financial advisor until the end of the year.
So, although you won’t have as much say in your portfolio, SoFi offers access to experts and robo-advisors via its website and mobile app that potentially makes it an appealing option for beginners or people who are already borrowers with SoFi Loans.
Another robo-advisor app that offers its services free of charge is M1 Finance. And for someone really interested in combining the ability to invest in small increments and the option to engage in both self-directed investing and utilizing robo-advisors, M1 offers an excellent array of features.
The service for its basic platform is completely free — a trend its founder believes the rest of the industry will follow in the coming years — and you simply choose from a wide selection of stocks, ETFs and professionally designed portfolios. After that, M1’s automation does the rest. M1 even allows you to purchase fractional shares so that you can invest in whatever amount is right for your financial situation regardless of the underlying share price.
With a nifty mobile app and plenty of investment options offered at no cost, M1 is right for just about anyone.
Check Out: The Best Robo-Advisors
Major broker TD Ameritrade has a mobile app that allows you to access its platform on the go, should you want to. The company charges a $6.95 per trade commission, which is — at least when compared to the bevy of other mobile apps offering free trading — on the high side.
However, to help offset this, TD Ameritrade also offers commission-free trading on some 300-plus ETFs, meaning you could easily construct a portfolio without paying a penny in commissions if you stick to that list. Likewise, it has a robust platform complete with a wide variety of research tools available to its clients.
Those looking for the comfort of a traditional broker with a long track record should consider TD Ameritrade’s mobile app.
Click to see the best brokers of the year.
E-Trade is another option for a more established, recognizable broker that still has one of the best trading apps at its disposal. However, much like TD Ameritrade, you could wind up paying much, much more in fees and commissions if you don’t pay attention to their pricing.
E-Trade charges $6.95 per trade, dropping to $4.95 per trade if you make at least 30 trades per quarter. However, they also have a list of over 250 ETFs that can be traded commission-free. This means the app can effectively function like other free trading platforms — such as Robinhood — provided you stick to the list of commission-free ETFs.
Click to see what you should look for in a broker.
This content is not provided by the companies mentioned. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by the companies listed in this article.