I asked experts if it's a good time for my fellow millennials to start investing, and was surprised to hear that in many cases the answer is no
Many millennials get into the market with stock-picking and active trading, choosing the exact stocks they want and buying and selling them regularly. But experts say trying to get ahead right now by picking stocks they think will surge after the coronavirus pandemic is over isn't a smart investing strategy. If you're just going to pick stocks, experts say now isn't the time to start investing. But if you want to start or continue a long-term investing strategy, go ahead and invest. Try commission-free trading with TD Ameritrade »
At the beginning of the pandemic and after some dramatic stock market drops, I had a thought. Maybe my generation, millennials, should start investing right now if they haven't already. Maybe, after years of lugging around student loan debt, paying most of our low starting salaries on rent, and being underemployed, we could finally use this big drop as a chance to get ahead. I found out that my similarly aged friends had also been wondering this, and naturally, I needed an answer. Since I was already planning to interview two experts on investing topics for some other stories, I figured I'd ask them their opinions on whether or not younger investors should see this as an opportunity. For people in their early 20s like I am — those who are just starting to think about saving for retirement and investing, and who happen to be coming of age in this pandemic — it seems like a no-brainer. But, I found out that the way a majority of my generation approaches investing means that they probably shouldn't start now. Now is not the time to be picking stocks, trading actively, or market timing Many of my millennial friends got their first forays into the stock market with stock picking via a platform like Robinhood, or earning stock options from companies. They're used to the idea of choosing what they buy. According to data from investing software company ETNA, about 72% of millennials describe their investment strategy as self-directed, where they pick their own investments. But right now, experts say that's a dangerous method. I asked financial planner Howard Hook with EKS Associates in Princeton, New Jersey, about starting to invest right now. His answer for a majority of people wanting to buy individual stocks was quite simply: Don't. "We're not market timers, we're doing long term buy and hold. We would never recommend clients to get into the market now as an opportunity," he told Business Insider in March. "It's just not the way we manage money and financial planning." In another interview with Sallie Krawcheck, a former Wall Street executive and now CEO of Ellevest, I asked for the worst advice she's hearing about investing lately. She quickly said one of the worst pieces of advice she's hearing involve taking action by investing now, especially with individual stock picking. "For an individual investor to think they somehow know something that the market doesn't know and to be able to trade around it and make money is an absolute fool's errand," Krawcheck told me in March. Now isn't a time for firing up a brokerage app, buying individual stocks in companies you think will boom after coronavirus ends, or trying to snatch up shares of pharmaceutical companies with hopes of cashing in on a cure. In short, that strategy won't end well. Business Insider's Linette Lopez reports that over 800,000 new brokerage accounts have been created with three of the four largest brokerage firms since the start of the pandemic. But the market is far from normal right now, and it's not a place for the newly minted investors to try their hands at hitting it big. "We have bored, unseasoned, emotionally conflicted investors playing around in a murky pool where one of the most opaque sectors has the ability to make the biggest waves," Lopez writes. "People are going to drown." A long-term strategy is the only way to invest during this pandemic Hook says there's a one group of people who are exempted from his previous 'don't start now' investment advice: anyone who wants to start a consistent, long-term investing strategy. "We're not necessarily saying don't get into the market if you have cash and you're ready to invest it and have a long time horizon. Then, now should be no different than any time," he says. "If [the advice] is to do anything, it should be to increase your recurring deposit into your diversified investment portfolio," Krawcheck said. Her comments actually prompted me to think a bit differently about my own investing strategy, and ultimately to switch from a stock-picking strategy with Robinhood to a safer, long-term strategy of buy-and-hold.
Krawcheck's advice is to play it safe right now — keep investing if you can, don't if you can't. Added to Hook's advice, this includes anyone who hasn't started, but wants to start investing in a way that's stable and automatic. Now is the time to start increasing 401(k) contributions or increasing a recurring deposit to a brokerage account. According to these two experts, investing in this moment shouldn't be about getting ahead; it should be about staying on course, or starting the course if necessary. Now is as good of a time to get into the market or stay in the market as any, but only if you're planning to do it in a stable way. Anyone who's expecting a miracle — my age or not — should probably take the time to to re-think their goals instead of taking action.
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Summary List Placement There's quite a bit of chance involved in stock-market investing. As financial experts...Summary List Placement There's quite a bit of chance involved in stock-market investing. As financial experts preach time and again, there's no way to predict returns with 100% certainty. No one — not even professional money managers — can time the market precisely. That means at least part of your performance as an investor is out of your hands. But it's easy for a novice investor to think they can replicate returns, especially once they've made money using their stock-picking strategy of choice, said Eric Roberge, a certified financial planner and founder of Beyond Your Hammock. "The worst thing that could happen to somebody in their first attempt to invest is choosing a stock that does well, because then they have this false sense of confidence that it's just as easy as picking the right stock — because I was smart enough to pick the right stock and that stock doubled, I can do it every time," Roberge said during Business Insider's Money Council roundtable in August. When the stock market bottomed out in March because of concerns about the coronavirus pandemic, investors scooped up discounted stocks, often through investment apps that emphasize active management and offer commission-free trading, like Robinhood. Popular stocks on these platforms included tech companies like Amazon and Facebook, which have experienced outsize gains throughout the recovery, Roberge said. Within five months, the S&P 500 had hit a record high, marking one of the fastest bear-market recoveries in history. Investors who achieved double-digits gains with relative ease might see it as a feather in their cap. "With that false sense of confidence, the only thing that's going to happen to you is you're going to get upset at some point in the future when that sector, that stock is not doing as well anymore," Roberge said. "And you suffer a 30%-plus loss and then say, 'Oh, the stock market is not for me. It's just a gamble. I'm done.'" Overconfidence is one of the most common financial biases Joseph Edmondson, a certified financial planner with Equitable Advisors, agreed that there'd been a "false sense of confidence" afoot since the stock market skyrocketed from its lowest point during the pandemic. According to the Corporate Finance Institute, one of the most common biases investors exhibit is overconfidence, often driven by an illusion of control. When investors believe they have control over a situation — which direction a stock will move, for example — they tend to overinflate their abilities and think situations are less risky than they are. "It's a really challenging situation we face when we start to believe that our smarts, our active management is actually producing better-than-average results and all you have to do is continue to do those activities to make it work," Roberge said. Edmondson said he tried to help every client understand that there will be ups and downs in the stock market and that neither should be the sole reason they sell their investments. The only sure way to success for an investor, he said, is developing a long-term plan that aligns with their personal risk tolerance and sticking to it.SEE ALSO: Half of millennials who aren't investing are waiting until they earn more money, and they could be making a big mistake SEE ALSO: Millennials are too focused on paying off debt to invest, but experts say there's room for both Join the conversation about this story »
A bull market means that stocks are rising, but it pays to understand how it works before you charge
Summary List Placement If you're at all interested in the world of investing, you'll notice the...Summary List Placement If you're at all interested in the world of investing, you'll notice the phrase "bull market" comes up a lot in common parlance. "The bulls were out today," says some strategist on TV or Twitter, and once again you wish you knew exactly what they meant. Let's break down just what bull markets are, and what they mean for both institutional and individual investors. What is a bull market? A bull market, also known as a bull run, is a long, extended period in the market when stock prices are on the rise. There is no single stat or metric that defines when we are in a bull market, but one common rule of thumb is stock prices increasing at least 20% from its most recent low, with signs that they will continue to grow. The term is most often applied to the stock market, as measured by the major indexes: the S&P 500, the tech-heavy Nasdaq, and the Dow Jones Industrial Average. But a bull market can also occur in anything that can be bought or sold, from individual stocks to other assets such as real estate, bonds, and currencies. A bull market is the opposite of a bear market, which happens when stock prices are falling. The nomenclature makes it easy to remember the difference: When aroused, bulls charge. They're known for running at great speed, and so they became a symbol for a surging stock market. In contrast, surly, defensive bears are associated with hibernating — hence, the perfect metaphor for a declining or sluggish stock market. Key traits of a bull market Though the two don't always move in strict tandem, bull markets often reflect an "up" period in the general economy — specifically, the expansion phase of a business cycle. The main characteristics of a bull market include: Investors buy more stock: Their prices have been going up, and investors are convinced they'll keep doing so, so they keep buying. This raises prices even higher, due to supply and demand. Companies bet more on their future: Buoyed by consumer buying, businesses make more investments, which usually means hiring more workers and paying existing employees more money. Unemployment rates go down: And average wages go up, as companies compete for workers. Workers are also more likely to look for a job since they have a better chance of finding one paying them more. Money is easier to spend: After all, it feels like it will be relatively easy to get more. And that means risking excessive inflation: All that money being spent can lead to prices going up too much. How long do bull markets last? Generally speaking, a bull market is considered over when stocks start a period of steady decline, falling at least 20% from their peak. But it's important to remember no two bull markets are the same. As the old saying goes, bull markets don't die of old age. They die when the market has changed fundamentally, when prices have risen too high or too fast, or when some other event forces investors to feel pessimistic about the future. Because it's impossible from day to day to tell when a market has reached its top, it's very difficult to foresee the end before you are in it. The length of any given bull market is informed by the factors of its time — a concept made clear if you take a moment to examine at some of the biggest bull markets in history: Post-World War II Rally: June 1949 to August 1956 In these prime post-war years, the S&P 500 rose 267% over 86 months, which works out to a commendable annualized return of 20%. On the home front, consumer goods to fuel the Baby Boom were the main driver, while a strong export market also helped companies grow. This bull stopped primarily because the Fed raised interest rates, and international tension helped bring on a bear market. However, the market was back in bull territory by 1957. The Housing Boom: October 2002 to October 2007 The Housing Bubble — a dramatic growth in the real estate sector — began after the federal government deeply cut interest rates in hopes of encouraging investment. The financial institutions that encouraged home financing, real estate investing, and trading in mortgages did extremely well — until interest rates started to climb again, and bad borrowers started to default, leading to the subprime mortgage crisis. Stocks hit their peak in early October 2007, marking the end of the bull market and the start of a recession. A bear market arrived the following summer. The Longest Bull Run in History: March 2009 to March 2020 This record-breaking bull market lasted 131.4 months (nearly 11 years), making it the longest in history. After taking a beating during the Great Recession (2007-09), the S&P 500 gained over 400% after a low of 666 points on March 6, 2009. On February 12, 2020, the Dow Jones Industrial Average reached a record high of 29,551 points. The gains for the S&P alone amounted to over $18 trillion on paper, and during the period unemployment was at a 40-year low, at under 4%. But just a month later, on March 11, the Dow lost over 20% of its value, falling to under 19,000. The S&P 500 and the Nasdaq were pounded soon after. The most obvious cause? Widespread fears over economic and social damage brought by the global spread of the new coronavirus, as businesses shuttered and millions of people were thrown out of work. The current financial landscape Buoyed by government spending and optimism about the economy and its long-term prospects, indexes quickly began a recovery after bottoming out in the last half of March 2020. After just a few months, the S+P 500, Dow, and Nasdaq had all regained the value they lost, putting the market well into bull territory. By late August, the S+P 500 and the Nasdaq were up 58% and 75% from their March 23 lows. But all that gravy hasn't been spread evenly: The main gainers have been Amazon, Netflix, Salesforce, Microsoft, Alphabet, and other monster tech companies that profited from our newly sedentary and homebound lifestyle. Many other companies, especially some in the retail and hospitality/travel sectors, have been more or less treading water, or going bankrupt. According to Christian Mueller-Glissmann, a portfolio strategist at Goldman Sachs, the current high stock prices may act as a "speed limit" in the future, meaning that investors will soon have to access whether those levels are merited by future performance: "This is what always happens after a bear market. You get an initial very sharp recovery, and then you get a period where the market actually sees what type of earnings growth you're really getting. "We feel that after this initial explosive recovery in growth, there might be a bit of disappointment for what you get in fundamentals." Tips on investing in a bull market Wondering how prudent investors act in a bull market? Here are some tips: Don't try to time the market. It's almost impossible to tell when the market is at its peak, and even professionals rarely manage to call it right. You might not only end up selling too late — but you might also end up selling way too early, missing out on future profits. Better to enter and leave the market gradually, without drama — or according to your own preset benchmarks — rather than selling all at once because you're convinced it's reached its top. If you follow a buying strategy like dollar-cost averaging, stick to it. Stay diversified. It can be tempting to go all in a hot stock or sector when the market has been growing, but the end may be closer than you think. If you've only bought the biggest so-called winners, you may find that their pumped-up prices evaporate the most quickly. A super-strong bull market can make even weak companies appear like sure things — until they aren't. Be sure you know what it means to diversify effectively, and keep in mind that reacting to news about individual stocks or companies isn't the best way to figure out where to invest. Pay attention to the all-mighty consumer. Companies that sell products directly to consumers (as opposed to industrials) have proven themselves over decades. Bull markets in recent years have tended to be powered by such companies, but more importantly, they may be a decent safe harbor during downturns as well. Consider investing in these equities, or in a large-cap mutual fund with such stalwarts. The financial takeaway It's impossible to predict exactly when a bull market will end. But it always does, after an external force affects investors' feelings about the future and stock prices start to look too pricey. Despite the inevitable dips, over an extended time horizon, the stock market has never failed to rise. So not being invested in the market means missing out over the long haul. Like a savvy matador, individual investors should keep an eye on the bull's moves, and adjust accordingly — but always stay in control of their overall strategy and goals. Related Coverage in Investing: What is a recession? How economists define periods of economic downturn Stock market's March bottom hit reset button for the next 10-year bull run — but investors should play it differently than in 2008, BMO strategy chief says Investors are most bullish on stocks since the start of the pandemic, according to BofA fund manager survey We're in the 'early innings' of a bull market, and any temporary correction will be just a buying opportunity, Leuthold strategy chief Jim Paulsen says Why invest in the stock market? Because it can be more dangerous not to Join the conversation about this story »
Investing feels more accessible than it's ever been. Whether you prefer a hands-off approach or...Investing feels more accessible than it's ever been. Whether you prefer a hands-off approach or love to pour over market research and make trades — or fall somewhere in between — the right investment app can make it that much easier to reach your goals. The best investment apps right now Brokerage Editor's rating (out of 5) Fees Best for E*TRADE 4.50 $0 trading 0.30% AUM fee; 0.65%-1.25% AUM fee for higher balances Fee-free trading and low-cost automated investing SoFi Invest 4.25 $0 trading No AUM fee 1.25% markup on cryptocurrency Fee-free automated investing and active trading Fidelity Go 3.88 $0 - $3/month 0.35%-0.50% AUM fee for higher balances No fund fees No-frills automated investing Robinhood 3.57 $0 trading Active investing Acorns 4.0 $1/month - $5/month Beginners Ellevest 4.5 $1/month - $9/month Goal-driven investing Charles Schwab Intelligent Portfolios 4.0 No AUM fee; $300 one-time + $30/month for higher balances Automated investing large balances In our search for the best investment apps, we considered what might be important to different types of investors, not the least of which is cost. You often need to spend money to make money, but it's possible to minimize fees and still maintain a quality investment strategy. Our list skews toward so-called robo-advisers — which use an algorithm to manage your investments — because, in many ways, they feel most accessible to average investors; fees and balance minimums are generally low and your big-picture goals can help create an individualized and diverse portfolio that doesn't require much ongoing maintenance. Table of Contents E*TRADE: Best investment app overall Why it stands out: E*TRADE is a one-stop-shop for investing. Whether you're a seasoned investor or a beginner, you'll find what you're looking for. E*TRADE recently eliminated all stock and ETF trading fees and offers over 4,000 no-load, no transaction-fee mutual funds. If you're not interested in self-directed investments, E*TRADE's Core Portfolios are a great option. After you fill out a risk profile to share your goals, time horizon, and risk tolerance, you'll get a recommended tax-sensitive portfolio of ETFs. You can further customize your portfolio as "socially responsible," which shifts your allocation to include an ETF with companies that have progressive social, environmental, and corporate practices, or "smart beta," which favors growth stocks in an attempt to outperform the market. To start investing, you'll need at least $500. If you're investing $25,000 or more, E*TRADE's Blend, Dedicated, and Fixed Income Portfolios are worth considering. In addition to a more customized portfolio, these plans include one-on-one advising with a financial consultant. Through E*TRADE's two mobile apps, you can access your accounts, make trades, view charts and research, and watch Bloomberg TV. Fees: For the active investor: $0 stock, ETF, and options trading For the passive investor: 0.30% annual AUM fee for a Core Portfolio (minimum balance of $500) For the high net worth investor: 0.65% to 0.90% annual AUM fee for a Blend Portfolio (minimum balance of $25,000); 0.95% to 1.25% annual AUM fee for a Dedicated Portfolio (minimum balance of $150,000); 0.35% to 0.75% annual AUM fee for a Fixed Income Portfolio (minimum balance of $250,000) Account types: Individual, joint, and custodial brokerage accounts; traditional, Roth, and SEP IRAs (includes rollovers) Look out for: While you're able to open an account and choose a Core Portfolio with $0 down, you'll need to fund the account with at least $500 to get started investing. Learn more about E*TRADE » SoFi Invest: Best fee-free investment app Why it stands out: You won't be charged any advisory fees, stock or ETF trade fees, or subscription fees to invest with SoFi. For those with a set-it-and-forget-it attitude, SoFi's automated investing platform will recommend a portfolio made up of ETFs, based on your risk tolerance. Once you decide which portfolio is appropriate, you can get started investing with as little as $1. You won't have to bother rebalancing your portfolio since SoFi will do it for you at least once a quarter, but if your goals or overall financial situation changes, you can adjust your portfolio and even set up an appointment with a SoFi financial planner at no extra cost. Keep in mind that you'll still have to pay fees to the funds you're invested in within your portfolio. Active investors don't pay transaction fees when buying and selling fractional shares, stocks, or ETFs. You can also invest in cryptocurrency but SoFi charges a markup of 1.25% on those transactions. SoFi Money (Member FDIC), a checking/savings account hybrid with a competitive interest rate, a debit card, and unlimited ATM fee reimbursements, can store money you're not ready to invest yet. Fees: $0 for automated investing and stock and ETF trades; 1.25% markup on crypto transactions. Account types: Individual and joint brokerage; Traditional, Roth, SEP IRAs (includes rollovers) Look out for: There are only five portfolio options available for passive investors, ranging from conservative to aggressive. Despite no advisory charges, you'll still incur fees from the ETFs included in your portfolio. Learn more about SoFi Invest » Fidelity Go: Best investment app for hands-off investors Why it stands out: Fidelity Go is an easy-to-understand investment app for those who don't want to spend a lot of time or incur too many fees building wealth. After answering a set of questions about your age, risk tolerance, and goals, a team of experts will select an appropriate portfolio made up exclusively of Fidelity Flex mutual funds, none of which charge additional management fees or fund expenses. That means you pay a flat 0.35% advisory fee, regardless of what you invest in. You only need $10 to get started investing, and the professionals behind Fidelity Go — not an algorithm — will rebalance your portfolio periodically. You can change your investment strategy at any time from seven different allocations ranging from conservative to aggressive. In August 2020, Fidelity changed up its pricing tiers and added an option for personalized financial planning. Fees: $0 for balances under $10,000 $3 a month for balances between $10,000 and $49,999 0.35% annual AUM fee for balances $50,000 and higher 0.50% annual AUM fee (minimum $25,000) for Fidelity Personalized Planning & Advice Account types: Individual and joint brokerage accounts; Traditional, Roth, SEP IRAs (includes rollovers) Look out for: There is customer support, but no option to connect with a human adviser one-on-one for financial planning unless you upgrade to the 0.50% AUM fee option. No tax-loss harvesting, which can be especially valuable for higher balances. Investments are limited to Fidelity Flex mutual funds, which may be limiting. Learn more about Fidelity Go » Robinhood: Best investment app for active investors Why it stands out: Robinhood is as simple as a commission-free trading app can be. Investors can buy and sell US-exchange listed stocks and ETFs (and fractional shares of both), options, and cryptocurrency without paying any fees. The minimum amount required to invest is just $1, but you need at least $25,000 in your account to day trade. For access to larger instant deposits, research reports from Morningstar, and NASDAQ market data, investors can upgrade to Robinhood Gold for a 30-day free trial and then $5 a month after that. The membership includes up to $50,000 in instant deposits, plus $1,000 of margin and a 5% interest charge on any excess margin used. Robinhood also has a no-fee, high-yield cash management account, which comes with a debit card and up to $1.25 million in FDIC insurance. Fees: $0 for daily trading of stocks, ETFs, options, and crypto; $5 for Robinhood Gold membership Account types: Individual brokerage Look out for: Robinhood has faced intensified public scrutiny throughout the coronavirus-induced market chaos. The New York Times reported that the app's gamelike interface encourages young and inexperienced investors to take too-big risks, often through "behavioral nudges and push notifications." After the suicide of a 20-year-old user who expressed confusion about the negative six-figure balance in his account after a complex options transaction, Robinhood announced a slew of changes, like adding more educational content around sophisticated options trading and hiring a specialist to assist users. Learn more about Robinhood » Acorns: Best investment app for beginners Why it stands out: A "micro-investing account" that lets you build your stake in the market a few cents and dollars at time, Acorns is one of the most approachable investment apps available. Portfolios are built around Modern Portfolio Theory to help investors achieve maximum returns at an appropriate risk level. As such, there are five pre-built portfolios, ranging from conservative to aggressive risk tolerance. Each includes up to seven ETFs from companies like BlackRock and Vanguard and is automatically rebalanced to maintain proper asset allocation. When you link your debit or credit card, Acorns will automatically round up each purchase to the nearest dollar and invest the unspent change in your portfolio. Through Acorns Found Money, an additional percentage of each purchase at select brands, including Walmart, Nike, and Airbnb, will be deposited into your investment account. It's like cash back, but the money goes directly toward your investments. For most people, those round-ups and additional retailer contributions don't add up to much, however, so we'd recommend supplementing with direct or recurring transfers to get the most out of Acorns. Note that Acorns recently restructured its subscription tiers, eliminating the $2 a month option. If you signed up for a $2 a month account prior to May 20, 2020, you will continue to pay that fee unless you change plans. Fees: Acorns Lite: $1/month for a brokerage account ($5 minimum to start investing) Acorns Personal: $3/month for a brokerage account, IRA, and checking account with debit card ($5 minimum to start investing) Acorns Family: $5/month for a brokerage account, IRA, investment account for kids (UTMA/UGMA), and checking account with debit card ($5 minimum to start investing) Account types: Individual brokerage account; Traditional, Roth, SEP IRAs; individual checking account Look out for: Acorns isn't as customizable as some of the other automated investing platforms. If you're looking to create your own portfolio so you can invest in specific companies or sectors, this investment app probably isn't right for you. Also, the monthly subscription fees may not seem high, but they could represent a hefty portion of your assets if you keep a small balance. Learn more about Acorns » Ellevest: Best investment app for goal-driven investing Why it stands out: Ellevest encourages you to build an investment philosophy around your goals, whether that's starting a business, having kids, splurging on a vacation or other big purchase, buying a home, retiring on time, or simply building wealth. Then, this female-forward online adviser takes it a step further and considers your gender, lifespan, and earning potential to create a custom portfolio of mostly ETFs. You can also opt for a socially responsible allocation, if that's important to you. As a fiduciary, Ellevest automatically rebalances and regularly updates your performance forecast, taking into consideration fees, taxes, and the occasional market crisis to show you whether you're on track to meet each of your goals — and what you can do to make up for it if you're not. The app also provides financial and career coaching and workshops — both within the membership offerings and à la carte — and most recently, banking accounts. Ellevest recently changed its pricing model and now charges a monthly membership fee ranging from $1 month to $9 a month. There are no additional investment advisory fees on top of the monthly membership, but there are underlying fees charged by the ETFs in your portfolio. Fees: Ellevest Essential: $1/month for a brokerage account, a no-fee checking account with a debit card, a no-fee savings account, and 20% off financial and career coaching sessions. Ellevest Plus: $5/month for everything included in Ellevest Essential, plus access to retirement planning specialists and help with account rollovers and 30% of coaching sessions. Ellevest Executive: $9/month for everything included in Ellevest Plus, in addition to up to six customized investment accounts for different goals, 50% of coaching sessions. Investment account types: Individual brokerage; Traditional, Roth, SEP IRAs (includes rollovers); checking and savings accounts. What to look out for: You'll have to spring for the higher-tier offerings if you want more specific guidance for your goals beyond "build wealth." Ellevest does not offer automated tax-loss harvesting, which can be valuable for investors with higher balances. As with any investment app that charges monthly fees rather than per-account advisory fees, it's important to note how much of your balance they represent. Learn more about Ellevest » Charles Schwab: Best investment app for auto-investing large balances Why it stands out: You'll find any type of investment you're looking for at Charles Schwab, from self-directed stock trading to mutual funds to retirement accounts, but it's the Schwab Intelligent Portfolio, the brokerage's robo-adviser, that ultimately outshines competitors. The Premium version requires a minimum investment balance of $25,000, but combines automated investing with ongoing financial planning. Your risk tolerance profile will help experts design a custom portfolio of Schwab ETFs that will be rebalanced regularly. All portfolios include a cash allocation, which is deposited in a Schwab high-yield account. A free add-on feature called Schwab Intelligent Income can help you generate a monthly paycheck from your brokerage or retirement accounts. You'll pay an initial planning fee of $300 to meet with a certified financial planner and a flat $30 a month for ongoing guidance whenever you need it, but no asset under management fee. Once your balance reaches $50,000, free tax-loss harvesting is available. There are also comprehensive online financial planning tools available that let you to link up various accounts to track your progress toward goals and forecast different scenarios on your own. Fees: Schwab Intelligent Portfolio: $0 advisory fee, but requires a minimum balance of $5,000 and does not include financial planner access Schwab Intelligent Portfolio Premium: $300 one-time financial planning fee and then $30 a month (minimum balance of $25,000) Account types: Individual, joint, custodial brokerage accounts; Traditional, Roth, SEP, SIMPLE, and rollover IRAs; trust accounts. Look out for: Minimum balance requirements disable anyone with less than $5,000 from investing in Schwab Intelligent Portfolios. As with any investment, you're responsible for paying the underlying fees in the ETFs in your portfolio. Learn more about Schwab Intelligent Portfolios » Others we considered and why they didn't make the cut Betterment: Betterment comes up short on financial planning tools available to the average investor and its advisory fee increases for account balances of $100,000 or more. Wealthfront: Wealthfront combines financial planning tools and robo-investing for a flat 0.25% advisory fee, but it also requires a $500 minimum balance to start investing, whereas Fidelity requires $10 and doesn't charge underlying ETF fees. M1: A good option for active or passive investors who want fee-free trading, fractional share investing, or custom portfolio building, but its research and guidance is not as intuitive or robust as some of the others. Wealthsimple: This investment app may be ideal for passive investors who want to invest in socially responsible companies, but the options are limited to three portfolios and the advisory fee is higher than competitors at 0.50% for balances under $100,000. TD Ameritrade: An incredibly research-rich investment app that recently slashed all trading fees, TD Ameritrade has a lot to offer, but its AUM fee for Essential Portfolios — its robo-adviser — is slightly higher than Wealthfront with the same investment minimum. Stash: Stash bundles a checking account, retirement accounts, and investments accounts together through a subscription model. It does make investing more accessible through fractional shares and customizable portfolios, but there are more cost-effective options for beginners. Ally Invest: This bank offers commission-free trading, but for portfolio investing there's a 0.30% advisory fee unless you keep at least 30% of your holdings in cash at all times. Vanguard: An undeniable leader in investing, Vanguard is a worthy competitor to E*TRADE and a few other stalwarts, but it doesn't have as many clear options for passive investors who want to create a portfolio to match their goals, and its investment minimums are relatively high. Stockpile: A fine option if you want to invest in small amounts to start, but trades cost $0.99. Merrill Edge: A convenient option for Bank of America users, but the lowest tier of managed portfolios command an annual fee between 0.30% and 0.45% on a minimum balance of $5,000. Frequently asked questions Why trust our recommendations? Personal Finance Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product, we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to. How did we chose the best investment apps? People may have varying risk capacities and financial goals they're working toward, but you'd be hard-pressed to find someone who doesn't prefer a cheaper way to invest. For that reason, cost was a huge factor in determining our list. To find the best investment apps, we set out to identify the companies that offer platforms that keep fees to a minimum (generally below 0.50% of assets under management, or AUM, for balances under $100,000) and offer a high-quality experience. In some cases, that means access to free financial planning tools — or financial planners themselves — and clear and easy-to-understand investment options. We compared nearly two dozen brokerages, placing heavy weighting on their advisory and trading fees, investment philosophy, investment options, and types of accounts available. User experience is also important, so we also looked at each brokerage's accompanying mobile app and scoured reviews on the Apple Store and Google Play to find out what regular users think of the product. Finally, we cross-referenced our research against popular comparison sites like Bankrate, the Balance, and NerdWallet to make sure we didn't miss a thing. What is the best investment app for beginners? In most cases, the best investment app for beginners is a robo-adviser that customizes a portfolio for you based on your goals and risk tolerance while keeping costs low, such as Fidelity, Acorns, or Ellevest. If you're just starting out investing, we don't recommend trading individual stocks and funds, unless you have guidance from an expert or a high capacity for risk. What is the best free investment app? SoFi Invest is a fee-free investment app accommodating both passive and active investors. There are no transaction fees on stock and ETF trades and no advisory fees for portfolio management. Investing through SoFi also gives you access to a financial planner at no additional charge. Keep in mind that you will pay fees to the funds you're invested in within your portfolio. Tanza Loudenback has been writing about money every day for more than three years. She is an expert on strategies for building wealth and financial products that help people make the most of their money. She is a candidate for the CFP® certification.Join the conversation about this story » NOW WATCH: Epidemiologists debunk 13 coronavirus myths