Did you know that some of the world’s first real stocks were traded in coffee shops on handwritten notes? That’s right! People would have to set up a meeting time and scribble an agreement on a piece of paper to buy or sell a stock.
Then, after stock exchanges became a thing, traders were still delivering order forms on paper and yelling at each other across the trade floor. It wasn’t until 1971 that the NASDAQ became the first-ever electronic stock exchange and all that paper stuff was a thing of the past.
These days, stock trading is becoming even more efficient and accessible. Anyone can now unlock their iPhone and have the power to invest right in the palm of their hand. But, before you start investing from your phone, it’s important to know which is the right investing app for you.
In this article, I’m going to break down a couple of the best stock trading apps out there and compare the pros and cons of each one. These are the 7 best stock trading apps for 2022.
Most people who want to get into stock trading tend to default to downloading Robinhood on their phone and making their trades through the Robinhood platform. However, depending on what kind of trading you’re doing, Robinhood is not always the best option. And I’ll talk more about that later.
But, if you’re investment strategy is more about active trading then, in my opinion, Robinhood is probably the best app you can go with. The main reason why Robinhood is good for active traders is that you don’t have to pay any commission on trades, which means that it doesn’t matter what your trading volume is. You can make two trades in a week or you can make 100 trades in a day. Either way, you’re not going to have to pay any commission to Robinhood.
Another major advantage of Robinhood is that they don’t have any minimum investment, which means that you can start investing with literally any amount of money, whether it’s your first $1,000 paycheck or the $10 you have in your pocket right now.
Plus, they offer fractional shares so you could, for instance, invest in a stock with a $100 share price even if you only have $5. And while there are other apps out there that are commission-free and have $0 investment minimums, Robinhood really shines in how simple it is to use. All you have to do is search for whatever stock you want in the easy-to-find search bar at the top and you can look at the stock’s performance and trade within seconds.
For active traders and day traders, Robinhood makes it easy to complete your trades as soon as you find that money-making sweet spot.
#2: Charles Schwab
Similar to Robinhood, the Charles Schwab trading app also has charges no commission on trades and has a $0 minimum investment. So, what makes Charles Schwab better for beginners than Robinhood? Well, Schwab offers a ton of tools and resources that are extremely helpful for teaching newbies about topics like personal finance and responsible investing. Unfortunately, you’re not going to find anything like that on Robinhood. And you probably won’t find it on any other zero-minimum, no-commission platform either.
Charles Schwab allows you access to their financial calculator tools right in the mobile app. With these tools, you can calculate how much you’ll need to save for college, to buy a house, or to retire. That way, you can set financial goals to start moving toward.
And, to help you reach them, Schwab also gives you access to tons of market research done by their experts, which means that you can make informed investments even if you’re just starting out.
Another super helpful thing about Schwab is that they have incredible customer assistance, probably better than 95% of other brokers. You can chat with a real person 24/7 either through an online live chat or over the phone. Or, if you’d rather talk to someone face-to-face, you can go to one of their many nationwide branches and talk to a professional in person. And, yes, all of that is available with no commissions or fees.
These resources can all be extremely helpful for beginners who may have trouble navigating their investment app or who want to learn how to invest responsibly.
Another advantage that Schwab has over Robinhood is that it gives you access to mutual funds, which are probably important to own if you want a well-diversified portfolio.
Let’s face it: unless you have a ton of time to spend on researching investments and you have a fair bit of luck, actively managing your own portfolio is usually just not worth it. So, why not leave it to the robots?
With the Wealthfront app, for a miniscule fee of 0.25%, you have access to a robo-advisor, which is essentially a program that asks you certain questions (like what your financial goals are and when you want to reach those goals) and then uses those inputs in its algorithms to determine the best financial strategy for you.
And, while you might be skeptical about trusting a robot with your finances, probably because you watched a movie like iRobot or The Matrix, it would seem that robo-advisors tend to do better than human advisors anyway, particularly because they charge such lower fees.
Plus, you’ll pretty much always have be risk-averse, considering that Wealthfront will invest your money in a portfolio of hundreds of ETFs, ensuring that your portfolio will be well diversified.
But, one of the very best features of Wealthfront’s robo-advisor is its tax-loss harvesting. This essentially means that any investment that you’re experiencing a loss on around the end of the year will be sold off by Wealthfront’s robo-advisor. Then, you’ll be able to claim that loss as a tax deduction. Wealthfront proudly boasts that they’ve added an extra 1.8% on top of their clients’ returns on average using this strategy. And that 1.8% could add up to a ton of money in the long-run.
So, if automated portfolio management seems like something you’d be interested in, the Wealthfront might just be the stock trading app for you. Unfortunately, I almost forgot to mention that there’s a minimum investment of $500. So, if you don’t have that now, maybe save up a little before signing up for a Wealthfront account.
For a lot of people out there, investing in the stock market is the last thing they’re thinking about. They have bills to pay and mouths to feed and all of their paychecks seem to disappear every month without ever accumulating savings that they could put toward investments.
Well, if that describes you, then the Acorns app is probably the best stock trading app for you. In truth, Acorns is more of a savings app than it is a stock trading app. It works by rounding up every purchase that you make in your daily life to the next dollar and then investing the difference in a portfolio of ETFs. That way, you can start saving and investing without putting in much effort.
You can have this spare change go straight into a normal FDIC-backed investment account; however, one of the best features of Acorns is that it allows you to open an IRA and then all of your spare change will just go straight towards your retirement.
You just have to answer a few questions about your age, income, and retirement goals, and Acorns will recommend an IRA type. Then, you can open a Roth IRA, traditional IRA, or SEP IRA. And, if you keep using this app over the span of your working life, you’ll have a significant amount of savings by the time you retire and you can kick it on the beaches in Florida for the rest of your life.
The most basic plan, called Acorns Personal, starts at $3 per month, which you should easily make up with your gains once you accumulate a decent amount of money in the app. Or, if you have kids, you can opt for the $5-per-month Acorns Family plan, which also allows you to open investment accounts for your children, seriously increasing your family’s savings power.
All in all, Acorns isn’t really for very serious investors. However, it can be an amazingly powerful tool for beginners in the stock market who want to harness the power of micro-investing without putting in much effort. And it’s also great for parents who want to get their kids started on investing early.
#5: Fidelity Investments
Personally, I don’t have all of my accounts with one bank or broker. I have credit cards with Capital One, banking with Chase, investing with Schwab, and so on. And, while using different companies for different financial products can have its advantages, it can also be a hassle to have to switch accounts and do mental math when you’re trying to figure out where your finances are at. Imagine if you could have all of your finances readily available to you in one easy-to-use app. Well, that’s where Fidelity Investments comes in.
With this app, you can have all of your finances with one company on one dashboard. You can have an investment account and an IRA (Roth or traditional). You can even have a business retirement account like a SEP IRA. You can open a checking account or even open a credit card that will contribute cash back straight into your investment account. You can pay your bills right through the portal with automated transfers, you can open a savings account, or even open an account with their robo-advisor Fidelity Go.
Unfortunately, Fidelity Go charges a fee of 0.35%, which is higher than the other robo-advisor we mentioned earlier: Wealthfront. However, if your priority is having all of your finances in one place, it might still be worth it.
Another huge advantage of Fidelity Investments is the information that it makes available to its clients. Fidelity clients get access to a ton of research on ETFs and mutual funds done by the company’s experts. Plus, there are tons of articles on budgeting, investing, and personal finance. You can even jump on one of their webinars to really take a deep dive into the world of finance.
Fidelity is great for investors of any experience level, whether you’re just starting out and want to make investing easy or you’re managing a huge, well-diversified portfolio.
They have a $0 minimum investment, no fees on transactions of stocks or ETFs, and they allow you to trade things like options, bonds, mutual funds, and more.
Best of all, whatever kind of trades you’re making, you’ll be able to see your entire financial situation in one easy-to-use portal.
Socially responsible investing is becoming more and more popular. For one, people don’t want their investment money to support corrupt or unethical enterprises. However, moral reasons aside, it seems that ESG companies (which stands for “Environmental, Social, and Governance”) tend to perform better than non-ESG companies in their sectors. So, it’s really a win-win. You can feel good about what your money is going toward and you can still get some great returns.
So, if you want to get into socially responsible investing, the best place to do so is through the Betterment app. Betterment is not just a place for ESG investing, it’s also a robo-advisor, and a good one. Their fee is 0.25%, which is the same as the Wealthfront app mentioned earlier.
There’s no minimum balance and any money that you put into an account with Betterment will be invested in a diversified portfolio of low-cost ETFs. You can choose to invest that money through an investment account or through an IRA. Betterment will also customize your portfolio based on what your risk tolerance and investment horizon are.
And, similar to Wealthfront, Betterment’s robo-advisor also does tax-loss harvesting, which can result in some nice tax savings. Unlike Wealthfront, though, Betterment offers you the option to choose socially responsible portfolios geared toward specific issues.
Want to make sure that your money is going toward environmentally-friendly companies? Betterment will build a portfolio for that. Are social issues at the top of your priority list? Betterment has a portfolio for that too.
If investing in a better world is something that’s important to you, there’s no better place than Betterment.
If you’re interested in stock trading and learning about how the market works but you don’t want to play around with real money, or you just don’t have any real money to play around with, then you might want to try out fantasy trading with Wealthbase.
You start with $100,000 in your account and then you get to choose where to invest that money, whether it’s in individual stocks, ETFs, or even cryptocurrencies. Then, you choose how long you want your game to last. It can be a day, a few weeks, a month, or a year. You can also invite your friends to compete with you and see who’s really the financial guru among the group.
Wealthbase also gives out real cash prizes to people who perform exceptionally well on the app. For instance, they had an August Fantasy Trading Challenge, that awarded $150 to the user who performed the best in the month.
And, even if you don’t win, Wealthbase is a great place to get some experience trading without putting actual money at stake. If you want to learn even more, you can check out some of the informational articles that they offer through the app as well.