Remember a few weeks ago when we discussed getting the most out of your savings account? One of the most important takeaways from that piece was that our savings accounts aren’t growing like they used to.
This is why it’s now more important than ever to consider putting at least some of your money into the stock market. I think the safest way to go about it is to have a nicely-sized nest egg in a regular savings account. That way, if you need to access cash quickly, you can.
Your longer term savings accounts can go multiple places. Of course, you’ll want to be saving for retirement through a 401(k) or a Roth IRA. Beyond that, though, you can look to invest in equities, bonds, fixed income or derivatives, all of which give your money a greater chance to grow.
Holy shit, that’s complex, right? We’ll get to all of those types of investment vehicles (and even alternative assets) in future newsletters. For now, though, we have suggestions for easier ways to get started.
Many apps and websites are charging small fees to allow you to invest in ETFs, or exchange traded funds. I, along with our designer and a She Spends reader, have three common investment tools. Here’s what we think!
I started using Stash, an investment app, over a month ago. I put just a little bit of cash into different types of ETFs, including one that focuses on young entrepreneurs that seems to be growing at the fastest pace.
I like that the app draws money directly from my savings account every two weeks. You can set it up to draw as frequently as you like. I also love the different types of ETFs I can invest in. The risk profiles are clear, which makes me feel less nervous about taking the plunge.
What I don’t like is that the withdrawal process is unclear. I reached out to Stash to get a clarification of how it works: “There is no set amount that must be in the account before you are able to withdraw; you’d first need to sell a portion or all of your shares which we trade in our trading windows from 9:30 a.m. and 4 p.m. EST.” Then you have to transfer the amount you sell to your bank account.
What’s more is that there is a fee for using the app to invest. Read up on why Stash may not be your best option for trading here.
Our designer Jemma has been testing out Acorns for just a few months now. The app rounds up the money you spend to full dollar amounts, then invests the spare change into ETFs.
It’s an easy way to get started investing on the stock market, in a very low risk way.
“I think my favorite thing is the roundup feature,” she wrote. “I’m thinking of it as basically a savings account.”
An important note! Acorns does charge a small fee for investing.The fees are $1 per month for all accounts with a balance under $5,000 and 0.25% of the balance per year on accounts over $5,000.
We love the mission of Ellevest, an online investing platform founded by Sallie Krawcheck, who worked on Wall Street before founding the startup. It's a passive investing platform for women, addressing our specific challenges on the stock market.
One She Spends reader has been investing with Ellevest for about a year now.
"I initially deposited $800 — most of the money I received as college graduation gifts — and invested it into the "Yes Me" account," she wrote in a message to She Spends. "Ellevest breaks down different goals (short-term goals like planning for a vacation and long-term goals like building wealth) with a different bond-stock ratio. Recently, I added another goal — saving money for an apartment down payment."
The fees, according to our reader, hover around 0.25% of an investment. Since the market is good and the platform pays dividends, our reader has had success with the platform, she wrote.
A separate She Spends reader has been using Betterment for a few months and has seen some success.
“I really like it! I wasn't investing before and it felt like it gave me the tools to just dive in,” she wrote in a note to She Spends.
Betterment allows users to choose a risk profile that fits their needs, and then acts as a robo-investing tool that follows the chosen risk profile. You can invest either manually or have it deduct funds each month.
There is a low fee, which is waived for the first six months if you have a promo code. What’s even better is that our reader has seen real returns of roughly 3.4%. Definitely better than a savings account!
- Alicia McElhaney / She Spends Issue #10