Have you wanted to invest for some time but not sure where to start? Have you done preliminary research regarding options to invest but are unable to meet the minimum account balances? I have been there. It is tough. There is so much information on the internet that it can be confusing to figure out where to start.
I have good news, though! In the last few years, various companies have introduced Apps targeted at the millennial generation looking to invest. They all have small minimums to invest and take the confusion out of investing. In fact, the three apps that I am going to tell you about today all have minimums of $5 or less.
Take a look at the 3 Apps below that allow you to invest with $5 or less to find one that will work well for you.
Acorns truly makes investing possible for anyone! With Acorns, you link your checking account or savings account to the app and it automatically rounds up and invests your spare change. Yes, you read that right. They round up your spare change. Therefore, if you are buying gas for your vehicle and the total is 23.01, they take the additional .99 out of your bank account and into your investment about with Acorns.
Making investments by rounding up your spare change isn’t the only way you can invest with Acorns. In addition, you can set an automatic investment for as little as $5 on a recurring basis. For example, you can invest $50 every month or even $10 every week. The app is super flexible with the dollar amount you choose to invest as well as the frequency.
Acorns invests in 5 different ETF’s (exchange-traded funds). An exchange-traded fund is a mix of stocks and bonds similar to a mutual fund. The main difference is that ETF’s trade throughout the day like a stock (i.e. the price per share can fluctuate throughout the day).
Acorns offers 5 different ETFs for you to invest in. Don’t worry if you aren’t familiar with ETFs. They help you choose the best option for your situation – specifically for your time horizon and your financial situation. The 6 different ETFs that Acorns offers are:
- Moderately Conservative
- Moderately Aggressive
The major benefits of Acorns includes the fact that there is not a minimum balance requirement and there are low fees. In addition, the account fees are $1 per month for balances under $5000 and 0.25% annually for balances over $5000.
Out of the 3 apps listed, Acorns was the first one that I tried myself. I have the app set to invest my spare change. In addition, every once in a while I will make a one-time investment for $20 or so. Since the app invests your spare change, it is easy to accumulate money without even noticing.
For more information about my personal experience with the app, check out this previous article posted to the site Acorns: Start Investing your Spare Change.
If you are ready to try Acorns for yourself, click here. You’ll get $5 added to your account to start off with.
Stash is an app that makes it easy to invest based on your interests, beliefs, and goals starting with as little as $5. With Stash, you can link your bank account to make regular reoccurring deposits. In addition, you can also make one-time deposits when you are looking to invest. Stash is only an application so to get started you do need a smartphone.
Similarly to Acorns, Stash is invested in ETFs (or exchange-traded funds). Exchange traded funds are a mix of stocks and bonds similar to a mutual fund; however, the price per share changes throughout the day like a stock.
The biggest difference between Acorns and Stash is what you are actually investing in. During the setup process, Stash asks questions regarding your interests, beliefs, and goals. Through the questionnaire, Stash helps you to invest in what is most important to you. There are about 30 investments to choose from; however, they are regularly adding additional options.
A few of the investing options with Stash include:
- Clean & Green: Invest in companies producing solar, wind, and other forms of renewable energy.
- Do the Right Thing: Invest in socially responsible businesses that make positive impacts on the world.
- Young Money: Invest in companies that could benefit from the spending power of millennials.
In addition, after you have used the app for a while they will give you suggestions based on other users. For example, if a lot of users that are invested in Clean & Green also like Do the Right Thing, they will let you know so you can do some research for yourself.
Similarly to Acorns, the major benefits of Stash is a low minimum balance requirement and low fees. With Stash, the account balance minimum is $5. The account fees are $1 per month for balances under $5000 and 0.25% annually for balances over $5000.
I started using Stash for myself in 2016. One of my favorite parts about Stash is that they provide a lot of investment education. In addition, you can invest in multiple ETFs without needing to invest a ton of money! It is a great way to keep your portfolio diversified. If you are looking to invest based on your beliefs then you should definitelyy try Stash for yourself. The app is very easy to use.
If you are ready to try it out, use my link and you’ll get $5 added to your account!
In comparison to Acorns and Stash, Betterment takes a different approach! Betterment looks at your goal (i.e. retirement, house down payment, etc…). From your initial deposit, monthly savings and time horizon, Betterment will tell you the chances of achieving your goal. Based on those factors, your account is invested in a mix of 13 ETFs (exchange-traded funds) automatically.
Also, Betterment provides more sophisticated account options. For example, the previous apps listed only provide for taxable or regular investment accounts. With Betterment, you can also open up an IRA if your goal is saving for retirement. In fact, if you have an old 401k or IRA, you can roll those assets into an IRA with Betterment. Also, if you are investing larger amounts and worried about the effect on your taxes, Betterment provides information regarding tax loss harvesting.
In terms of fees, Betterment is a bit higher than the other apps. If you auto-deposit at least $100 per month, the fee is 0.35% per month for an account with a balance less than $10,000. If you decide not to auto-invest, the fee is $3 per month for an account balance less than $10,000. And if you exceed $10,000, the monthly fee continues to drop. Visit Betterment for more information!
Investing in the Apps listed above is different from a savings account. A savings account is FDIC insured up to $250,000. Therefore, your savings account is guaranteed to not lose value up to $250,000 in your account. There are risks associated with investing; therefore, only use money that you are able to sacrifice and even possibly lose. If you have extra cash and aren’t sure what to do with it, consider funding your emergency fund or retirement account prior to these apps listed above.
Related: Do these 3 things prior to investing
You May Enjoy These Other Posts:
- How to Invest with $100 or less
- The 5 Biggest Myths about Investing (costing you money)
- 4 Lessons the Gym Taught Me About Investing
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What has been holding you back from investing? If you have already started to invest, what tools do you use? Have you used any of the apps before to invest? If so, tell us your experience!