You don’t have to be an expert to get started investing. In fact, if you’ve followed our previous articles, including Investing in Stocks for Beginners: How to Start Investing, Investing in Stocks for Beginners: Online Brokers & Robo-Advisors and Investing in Stocks for Beginners Employer-Provided Investing, you know there are many options for newcomers. But two of those options, spare change investing and investing while spending, can make setting money aside automatic.
Investing in Stock for Beginners
In our previous articles, we introduced you to the concept of online investing, which has made the stock market accessible to everyone. But it’s also made things a little more complicated. Now instead of picking a brokerage, you need to choose between a variety of investment platforms.
Previous articles in the Investing in Stocks for Beginners series reviewed these investment options:
- Employer-provided investments: Your research should start with your own employer. Check to see if you’re making the most of retirement savings offerings like 401(k) accounts. Additionally, some employers give employees the opportunity to invest in the company as an employee benefit.
- Online brokers: You don’t have to go to a brick-and-mortar broker to get started. There are plenty of online brokers available.
- Do-it-yourself apps: There are apps that let you set up your portfolio and manage things on your own. You’ll typically also be given access to professional guidance and educational resources if you need them.
- Robo-advisors: With robo-advisors, you get automated assistance with your investment choices. These tools use artificial intelligence to help you find your way to a winning portfolio.
But there are two more online options to discuss: spare change investing and investing while spending. Both of these options technically fall under the “online investing” heading, but they’re different because most of the hard work happens in the background, while you’re going along with your life.
Read More: Easy Stocks for Beginners
How These Apps Work
As you’re learning about investing in stocks for beginners, you’ll notice there are many different types of investing apps. With spare change apps, the money is rounded up and put into your portfolio. You’ll then need to choose the stocks you want to invest that money in.
But another type of investment account lets you automatically invest as you spend. That means when your monthly subscription to Netflix renews, you get Netflix stock. Over time, you’ll build a portfolio of investments in companies you personally believe in.
Read More: Basic Knowledge of Stock Investing
How Spare Change Investing Works
If you’ve ever had a piggy bank, you get the concept of spare change apps. In an increasingly cashless economy, though, the concept of tossing change into a jar is no longer as relevant. With spare change investing, you apply that concept to electronic purchases.
The way the process works depends on the app you choose. But looking at a popular spare change investing app, Acorns, here is how it works:
- You’ll set an account and link to your bank account and credit card or debit card.
- Spend as you normally would. If you spend $4.35 on coffee, Acorns will tally the extra $.65. This will happen throughout the day, as well as the following days, until you reach a predetermined threshold. For Acorns, that’s $5.
- Once your spare change reaches $5, Acorns takes the money out of your checking account.
- You can invest the amount from your spare change into ETFs, starting with as little as $5. Your investments will be diversified across more than 7,000 stocks and bonds.
How Investing While Spending Works
Investing while spending borrows on the loyalty program concept. Instead of getting reward points for the money you spend, you’ll earn individual stocks with those businesses. For instance, if you regularly shop at Walmart, when you make those purchases, you’ll earn Walmart Stock.
There are multiple companies that do this, including Stash Invest. Looking at Stash as an example, here’s how investing while spending works.
- Sign up for an account and answer questions about your investing goals and risk tolerance.
- Choose from various account types, starting with a Beginner account for only $1 a month, which includes everything you need to start earning stocks.
- Your new account will include a Stock-Back® Card, which is a debit card that earns you stocks. Stocks on their platform include big-name brands like Walmart, Amazon, Netflix and Starbucks. If you make a purchase with a business that’s not part of Stash Invest, you’ll get a stock or diversified fund of your choice.
- Stocks are added to your portfolio, which you can fill with other stocks of your choice.
Read More: 5 Automatic Savings Apps to Help You in 2020
Investing in stocks for beginners is easier than ever, thanks to spare change and investing while spending apps. But it’s also important to compare what you’ll get with these services to other platforms like Etrade and TD Ameritrade. You may find investment options like having money automatically moved to your portfolio from your checking each month are just as convenient and give you more options for your investments.
Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.