Entering the world of investing isn’t easy—there’s a huge amount of information out there, and taking your first steps into the market without knowing what you’re doing is very dangerous. Fortunately, there are quite a few tools that will help you get started investing and saving money, even if you’re a total beginner and don’t follow the financial news religiously. Here are six of the best.
After getting some information about you, including your income and goals, Betterment suggests priorities and an investment plan to help you get there. You set up a monthly contribution to your Betterment account, and it’s automatically invested in a variety of places—some low-risk and some moderate-risk—to help you create a diversified portfolio.
The algorithms used to make recommendations take into account your goals and recommend certain mixes of conservative and more risky investments to increase the likelihood of reaching your goals in your timeframe. It also performs automatic rebalancing to keep an optimal distribution of assets, helps you consolidate and manage your retirement accounts, and take advantage of any losses by claiming them on your taxes.
With fees between 0.15% and 0.35% (depending on your account balance), Betterment is a much more affordable option than many traditional investment methods. There’s no minimum deposit, and no minimum balance.
SigFig aims to put your money in low-risk, low-cost funds so that you can make the most of your money. After you’ve made the minimum deposit of $2000 and answered a few questions about your risk preference, SigFig will calculate an optimal distribution of investments and make them for you (you can also manually adjust your risk preference).
The advisors at SigFig can also help you get your current portfolio in order so that it best helps you meet your goals. And while your account balance is under $10,000, you pay no administration fee. After that, it’s 0.25%, making it a lot cheaper than traditional invesment managers.
Your investments will be guided by Modern Portfolio Theory, a Nobel-Prize-winning theory of investment, which the company believes will minimize risk and maximize return on your investments. According to Wikipedia, the theory has lately come under fire, but the fact that it won a Nobel Prize speaks highly of its return potential.
Another service that makes an effort to point out its reliance on Modern Portfolio Theory, FutureAdvisor is strongly focused on retirement planning and saving for your kids’ college tuition. By emphasizing transparency and full-portfolio management, FutureAdvisor aims to help you get to retirement age with enough money to see you through.
And when it comes to college savings, the site puts your money in the best type of account, no matter where it is—which means they go through each state-specific account and see if it will work for you. Based on the expected return over 20 years, FutureAdvisor will net you an additional $65,000 in college savings over a 0.5% interest rate savings account.
The fee for retirement planning is 0.5% per year, making it one of the more expensive online options, but college savings planning is free, with no limit on time.
With a team of highly regarded investors and entrepreneurs behind it, WealthFront brings to bear a lot of expertise in handling your money. Their team has collectively written 16 different books on the topic, which should give you an idea of how much thought they’ve put into it.
By investing in diversified markets and handling both retirement and non-retirement accounts, WealthFront aims to help you get a solid return on your investment. And by closely monitoring how your investments perform and taking into account the tax implications of that performance, they also minimize the amount of taxes you pay, increasing your earnings over time.
WealthFront has the highest minimum investment of the services here, with an initial deposit of $5,000 required. They won’t charge you a fee on an account balance of less than $10,000, but once you break that threshold, you’ll pay 0.25% annually.
If you’re looking for something really different from traditional investing methods, Tip’d Off might be for you. Instead of using algorithms to guide your investing, this site lets you watch and learn from other investors. By crowdsourcing investment data, Tip’d Off gives you more than just advice: it gives you hard data, too.
By watching what other users are doing and sharing tips and advice on trading, Tip’d Off helps you trade at the same time that it helps you learn. If you’re looking for an investing solution that will not only help you invest effectively, but also help you learn enough to manage your own stocks in the future, this is a good way to go.
Tip’d Off also offers paper trading, which allows you to practice trading with fake stocks to get the hang of the investment game.
If you aren’t comfortable leaving your money in the hands of an equation, and the rather informal nature of Tip’d Off doesn’t appeal to you, there are a number of online investing resources that can help you learn your way around the stock market yourself. This takes a lot of work, but it can be very rewarding.
Read investing blogs; The Motley Fool’s How to Invest and About.com’s Investing for Beginners are great places to start, and InvestorPlace and Forbes’ Investing section are good ones to graduate go. Read magazines like the Financial Times, Barron’s, and Kiplinger’s. There’s also a great list of books for beginning investors at InvestorPlace.
And, of course, you can always talk to a financial advisor. If you start investing without knowing what you’re doing, you’re taking on a huge amount of risk that could result in a large loss of money. Talking to a financial advisor can help you mitigate some of that risk by taking advantage of years of experience (though it will cost you more money than the options above).
By managing your investments well, you can save a lot of money for the future, whether you hope to use it for retirement, buying a new home, sending your kids to college, or just having some savings put away. These six different ways of getting into the market without a lot of knowledge will help you get started.
Have you used any of these investment tools? What resources have you found to be the most useful? Share your thoughts and favorite links below!
Image credit: Businessman checking stock market on tablet (edited) via Shutterstock.