Investing can be daunting if you’re unfamiliar with the inner-workings of the stock market. But it’s really not rocket science. What’s more, it’s actually a pretty sensible way to secure your financial future.
But where do you start? Is it really possible to start dipping your feet into the world of investing if you don’t have a net worth of millions or have a limited understanding of how to best start investing thoughtfully?
We scoured the web for some of the best online investing tools (in no particular order) to help you get started.
- Personal Capital
Personal Capital enables an investor to link virtually any investment account, including retirement accounts and taxable accounts on the platform. Once linked, Personal Capital tracks performance, asset allocation and fees.
Besides managing investment accounts, the platform also helps to develop your long-term financial strategy – it lets you calculate your net worth, set a budget, and plan for retirement.
Pros: Personal Capital offers free apps for smartphones and tablet. They also have graphs to make it easy for investors to compare returns to an index or understand a portfolio’s asset allocation.
Cons: Many tools are free. But the optional asset management service tool does come with a fee. While it’s not horribly priced, it is comparatively higher than some other robo advisors in the market. It also comes with a US$100,000 minimum account requirement, which makes it out of reach for many customers.
Morningstar offers one of the most robust investment tracking tools available in the market. They include the basics, such as performance, investment costs and comparison to various indexes.
Once you’ve entered your portfolio, you’ll be able to use the tools available to evaluate your investments. Morningstar also provides more advanced tools, such as its star ratings and X-Ray feature, which comes with both free (Instant X Ray) and paid (premium) versions.
Pros: The free Instant X-Ray tool enables an investor to see the details of a portfolio of mutual funds or ETFs. For instance, the tool breaks down a portfolio’s asset allocation, investment style, stock sectors, industry sectors and geographic exposure. It also analyses how well your holdings and expenses are adding up to meet your financial goals.
Cons: It cannot link to your investment accounts, so portfolios need to be entered manually. The portfolio tool is available for free, although some tools require a paid membership.
Also read: ETFs Or REITs: Which Is A Better Investment?
Betterment is a good starting point for investors seeking investment guidance in an automated fashion and at a lower annual fee compared to traditional financial advisors. The robo-advisor focuses primarily on investing goals (such as having a baby or buying a home), but hides the technical details on how to invest, which makes it somewhat less intimidating for beginners who don’t really want to mess around with stock picking, and just wants to invest for long-term.
When you deposit money with Betterment, it is invested into a diversified blend of stock and bond exchange traded funds (ETFs). The asset allocation between these various ETFs ensures that your account is diversified across asset classes, companies, countries or sectors. This diversification helps to minimise. overall investment risk.
Pros: Betterment has no minimum deposit and costs 0.25% per annum. They have also recently added in human advisors as an option, so investors get to choose.
Cons: While it is a good starting point for beginners, it might not be suitable for people who are out to “beat the market” or those who want to trade individual stocks.
No doubt, exploring new online investing tools is fun, it never hurts to beef up your investment knowledge first. Here are same easy (and free!) ways to improve your financial IQ.