investing apps

Are investing apps worth it?

If you’re reading this you probably want to try some investing apps. And you’re absolutely right to ask questions before you commit money to anything.

It’s hard to earn so it doesn’t make any sense to throw it at everything within your eyesight. I am a big supporter of research when it comes to investing so I hope you’ve come to the right place.

A simple search on the Play Store returns hundreds if not thousands of results. Sometimes this gets me confused so I’m sure a brand new investor will feel overwhelmed by the choice.

Types of investing apps

When you search for investing apps you’ll get something like this:

Google Play Store

Note the scroller bar on the right. You can spend days just checking out the descriptions.

If we narrow it down we can split them into information apps, analysis apps, brokers and even games. Sometimes they overlap.

News, information and analysis apps, Yahoo Finance and MSN Money are similar. However, they have slightly different functionality. They are all free so you just need to check them and see which one you like.

There are paid subscription news & info apps, like Bloomberg and WSJ, but I’d suggest to try the free ones first.

You may find out that you like to read news on one while you prefer to check company statistics on another. This is perfectly fine, you need something convenient.

Just don’t install too many! Too much information can be a bad thing.

News apps can have financial data, share statistics or analyst ratings too. Some will even offer a technical analysis section.

However, if you are big on technical analysis you may find that an app like Trading View will be more suitable than a summary.

Usually you can’t invest in stocks through news and information apps.

Brokerage apps

These will cover the bulk of the investing apps we are interested in. When you choose one of them you will be committing money to earn something in the future.

You may be using an app but it is no less of a brokerage platform than any other. It doesn’t matter how you access your brokerage account.

What to look out for when you pick an investing app

The first thing to start off with is to find out if the company behind the app is registered with any regulators.

Regulatory bodies

You can search the Financial Conduct Authority‘s (FCA) website to check if the company is registered.

Some investments are protected by the Financial Services Compensation Scheme which covers up to £85k. You can check if you’re protected here.

Nowadays you can invest anywhere and you’ll come across companies registered in the US, Cyprus or elsewhere. This may get you a bit worried about retrieving your money should something bad happen.

A developed country like the US is expected to have similar consumer protection as the UK. The relevant organisations are FINRA and SIPC.

It is a bit more difficult to decide if it is a good idea to invest with a broker registered in Cyprus for example. There may be a legitimate reason why it is not registered with the FCA.

But there are so many apps so you have a legitimate reason to choose one which is registered with the regulators.

History and track record

Barclays bank was established in 1690. These guys have been around an awful long time. Past performance is never an indication of the future but it makes you feel more comfortable.

Apps only appeared about 10 years ago, however, some of the companies behind them have been in business for ages.

Old school brokerage firms

A lot of old brokerage firms have apps because they appreciate that no one is buying shares by phone anymore.

You’d find that many companies have a website, desktop software and an app. It gives you more choice. I prefer to use desktop software but I also use the app when I’m out and about and even the website every now and again.

Fintech companies

These are the newer brokerages, they combine two of my favourite things: technology and finance.

Fintech firms recognise that we just prefer to use our phones for everything these days. They also know we like free stuff!

You need to be careful because sometimes the freebies come out of your pocket.

One thing to look at is how are orders executed. Are they routed to the exchange, over the counter or in batches at a set time of the day? You want them to go to the exchange immediately.

User base

The user base can be a proxy for the company’s reputation. I’d go for an app that has 100 million users any day over an app with 10k.

Have a look at some reviews as well but don’t forget that a happy customer won’t spend time writing. Chances are you’d find more unhappy people there.

If you do, have a look at what they complained about.

Trading vs Investing

Before picking an investing app you have to decide if you want to trade or invest. You may be buying and selling shares either way but the platform makes a difference.

Trading is a more fast paced endeavour because you will be buying and selling things multiple times per day or week.

Investing accounts

If you want something slower you can invest by opening a stocks & shares ISA account for example. Then you just buy some shares and leave them alone. You can deposit and withdraw money anytime you want and all your profits are tax free.

Nowadays, you can even have your pension on your phone. Some apps offer a SIPP account. The downside is that you can’t withdraw any money for decades.

If you need to withdraw money from time to time or don’t want to wait until retirement, then the SIPP won’t do you much good. On the other hand someone may want to save even more on tax and it may be perfect from them.

Think about your personal circumstances before you deposit money. Nothing is stopping you from having all of the accounts. I use two brokers for different things.

If you want more than one account, like and ISA and a SIPP, check if any of the apps offer both. You may find it more convenient.

Product selection

Unfortunately we can’t stop with trading vs investing. Choosing the right investing app also involves the product selection.

Shares & ETFs

You won’t be happy if you can’t buy the shares you want. Some apps have a somewhat limited selection of shares and ETFs. Others have everything under the sun.

It comes at a cost though because the ones that offer a wide selection charge more too. I think this is normal because the access to the products costs them money.

Other apps offer a limited selection but they are free or charge less. When I say limited I mean 2000 shares and ETFs so it’s not that bad.

Trading products

Some apps only offer trading products like CFD, spread betting, binary options and forex. These are derivatives so they are more complex than shares.

If you are brand new I’d suggest to avoid them for the time being. Start with shares first and you can try derivatives later on when you have some experience.

The reason is that you can blow up your account quite quickly. I hate to see people who were put off from investing just because they started with the wrong product.

When you buy a share you know that you own a small piece of a company or a fund. It remains yours until you sell it.

If you trade derivatives you can lose a lot because your broker gives you money. Effectively you are trading with £2,000 against your £100 deposit. It is alluring but nevertheless a double edged sword.

Investing Apps Fees

A lot of the investing apps are free. Sure, but someone somewhere pays for the service. It can’t be the brokerage because it will go bankrupt so it has to be you.

Whenever you buy a financial product it has a bid ask spread. For example, you buy it for £1.02 but if you sell it immediately you only get £1.00.

It’s not a lot but the financial institutions process millions of transactions so it adds up.

The free apps usually have a wider spread than the old school brokers. However, the old school guys charge fees. So which one do you choose?

I think that it depends on the amount of money you are investing and how often you buy and sell shares.

If you are investing a large amount you’d want a more established broker to make sure that the chance of bankruptcy is lower.

And if you just want to buy a few funds every year then the bid ask spread won’t matter much to you. So you may decide to pick one of the free apps.

Again it all depends on your circumstances.

Are investing apps worth it

They can be! If you invest you give yourself a chance to grow your savings. However, you need to pick wisely.

First have a look at the different accounts and choose the one which is right for you. Then check the brokerage’s history and track record.

Once you’re done with this look at the product selection and the fees.

If you decide that you want to trade instead you’ll need to do some more research. I like to trade options but others swear by forex or futures.

There are no right or wrong choices, it has to be the product that’s right for you!