For most people, the world of investing seems dry, calcified, and sometimes, sketchy. This sentiment is especially true among millennials, who experienced two financial fallouts in the '90s and 2008. The few who are interested in the stock market are likely faced with fees, commissions, and account minimums. For example, say you wanted to open an account with Charles Schwab: You'd have to pony up a minimum of $1,000 just to open the damn account, then pay $8.95 each time you buy or sell -- a charge known as commission.
When I first started investing twelve years ago, I was filled with adrenaline every morning. I would find myself glued to the computer screen watching every move of the market. After my 9 a.m. class, I would rush back to my dorm to see how the market was doing. One thing I failed to realize at the time was the cost of trading. The $18 round-trip transaction seemed like small pennies to me at the time, but all these costs added up.
Technology these days has really changed the way we invest. It's amazing to see how new tech companies are disrupting this market. From robo-advisors to commission free brokerages, investing isn't as daunting as it used to be. A recent CNN report shows that 93 percent don't invest because of their distrust with the market and lack of knowledge. We're all equipped with better tools and information that gives us an edge from the days when online brokerages started appearing, but yet, millennials are still reluctant to put their money in the market. Perhaps, companies that resonate better with millennials might have a better shot at getting them to start investing.
Two new apps, Robinhood and Acorns, are changing the game. They aim to make investing more accessible, but do so in different ways. Robinhood allows people to buy and sell individual stocks and ETFs, which allows for more power. Acorns links with your bank account and rounds up your daily transactions to the nearest dollar, then places the remainder in a diversified portfolio.
Robinhood recently launched to the public and is great for first-time investors. Robinhood doesn't have any account minimums and doesn't charge commission, so you won't be charged $7 to $10 per trade. For now, they only offer trading from their iOS app (which is beautiful). While they were building their app last year, over 800,000 people signed up for their waitlist, eager to join as soon as the app became available. The Palo Alto-based company makes money by collecting interest off of the cash balances & will charge interest for more active investors who want to trade on margin.
Passive investors might find harmony with Acorns. The app works in the background and recommends a suitable portfolio based on your age, income, and tolerance to risk. So that $4.80 B.LT. sandwich you had for lunch can be rounded up to $5.00 and $.20 will be dropped in your Acorns account. Acorns charges $1 per month for accounts under $5,000 and .25% per year for accounts over $5,000, and is available for iOS and Android.
So if you're a novice investor looking to give the market a fair shot, there's no need to rush into it. Start small and work your way up. Watch videos on YouTube, follow investment blogs, or join an online community such as Openfolio or Nvestly. No matter what stage you're at, investing doesn't have to be daunting if you only invest what you can afford.