Introduction
Investing is a great way to grow your savings and achieve your financial goals. However, not everyone has the knowledge or expertise to invest wisely. Moreover, some people might not have a large sum to invest. For such individuals under investment accounts are the best fit. Underinvestment accounts are designed to help small investors get started easily and at a low cost. They offer entry-level investment products with minimal fees that make it an affordable option for beginner investors. In this article, we will discuss the top 12 under investment accounts for budding investors.
What are Under-Investment Accounts?
Underinvestment accounts are investment accounts that are designed for retail investors who do not have much money to invest. Underinvestment accounts allow individuals to invest smaller amounts than traditional investment accounts require. Underinvestment accounts also do not have a high entry barrier, making them accessible to more novice investors via online platforms. Furthermore, these accounts generally have low fees and offer low-risk investment options, making them ideal for beginner investors.
Top 12 Under-Investment Accounts for Budding Investors
1. Acorns
Acorns is an online investment platform that allows users to start investing with only $5. Acorns invests your money in easy-to-understand ETFs and automatically rebalances your portfolio. This platform makes investing easy and accessible for anyone.
2. Betterment
Betterment is another leading online investment platform with a minimum investment of $10. It offers personalized investment plans based on user’s financial goals and risk tolerance. Betterment charges low management fees and utilizes tax-efficient strategies to maximize user’s returns.
3. Stash
Stash is an online investment app that allows users to buy fractional shares of stocks, ETFs and bonds. Stash offers personalized investment recommendations based on a user’s risk profile. Moreover, Stash allows users to invest with as little as $5.
4. Robinhood
Robinhood is a commission-free online investment platform that allows users to buy and sell stocks, options, crypto and ETFs. Robinhood’s user-friendly mobile app and easy-to-use trading platform make it easy for beginners and novice investors alike to invest.
5. Wealthfront
Wealthfront is another online investment platform that automates a user’s portfolio and uses advanced algorithms to optimize returns. Wealthfront offers low management fees and requires only a $500 minimum investment. Weathfront’s tax-loss harvesting feature minimizes the taxes investors pay on their returns.
6. M1 Finance
M1 Finance offers a customizable portfolio of stocks and ETFs that a user can invest in with no management fees or commissions. M1 Finance’s ‘pie’ approach allows investors to pick an investment strategy using pre-made portfolios. And investors can also create their own portfolios based on their preferences.
7. TD Ameritrade
TD Ameritrade charges no commission for US stock, ETF, and options trading. Moreover, TD Ameritrade offers more than 4,000 no-transaction-fee mutual funds, low-cost pricing and margin rates, investment education, and access to trading professionals for assistance.
8. Vanguard
Vanguard is an investment giant with an extensive selection of low-cost ETFs and index funds. Vanguard’s investment minimums required for the investor’s first purchase of a fund are as low as $1,000. Vanguard offers seasoned investors or novices, a broad spectrum of investment options.
9. Fidelity
Fidelity is another investment platform with no account minimum and low-cost pricing. Fidelity offers a wide array of investment options, such as stocks, ETFs, mutual funds, and a robo-advisor service. Fidelity does not have transaction fees for 5,000-plus mutual funds.
10. Ally Invest
Ally Invest offers investors both automated investing through Ally Invest Managed Portfolios and self-directed investing with no minimum account balance. Additionally, Ally Invest does not charge investors account opening, maintenance, or closing service fees.
11. E*TRADE
E*TRADE is an online brokerage for self-directed investors that offers competitive rates for stocks, options, bonds, futures, forex trading, and 6,000 ETFs without requiring an account minimum deposit.
12. Schwab
Schwab is a brokerage with no fee IRAs and access to ETFs and mutual funds is open to everyone. Its brokerage accounts reduce fees for all small, passive investments made, and offer no-fee international index funds.
Frequently Asked Questions
1. How do I choose the right underinvestment account?
Choosing an underinvestment account depends on your investment needs and personal goals. Consider the minimum investment, fees, investment options, account types, and the reputation of the platform before making a decision.
2. How much should I invest in an under-investment account?
The amount you should invest in an underinvestment account depends on your financial circumstances and goals. It is essential to invest only what you can afford to lose.
3. Do under-investment accounts offer tax advantages?
Underinvestment accounts that use tax-efficient strategies, like tax-loss harvesting, can minimize the tax impact on your investment returns.
4. Can I lose all of my money with underinvestment accounts?
Any investment involves some risk, and it is possible that you might lose all of your investment. However, underinvestment accounts generally offer low-risk investment options and could reduce the risk of a significant loss.
5. Are online under-investment accounts safe from fraud?
Online underinvestment accounts are subject to safeguards and regulations to ensure their legitimacy. Most reputable platforms have detailed security protocols and procedures in place to protect their users’ data.
Conclusion
Underinvestment accounts are great investment options for novice investors who have a limited amount of money to invest. They offer tailored investment recommendations, low fees, personalized services, and low-risk investment options. It is worth finding an underinvestment account that suits your investment goals, risk tolerance, and circumstances, and start investing today.
