How to Use an Investment App to Diversify Your Portfolio

Investment apps allow individuals to monitor portfolios in real time and make informed decisions using research and educational resources available through these applications. Plus, there are no fees involved and hands-off automation capabilities.

Users tend to favor apps regulated by government bodies, including complying with Financial Industry Regulatory Authority (FINRA) rules and anti-money laundering regulations.

Stocks

Stocks are small pieces of a company called equities that can be bought and sold on the market. When purchasing shares of any given company, the value of those portions fluctuate with market news and events. Stocks offer investors a way to build wealth while companies use stocks as a fundraising vehicle for new product or service development and growth.

Design of trading apps can either encourage or discourage certain behaviors. For example, designs that make trading social like Public’s feature of allowing users to display their portfolio on their profile and curate lists of popular stocks (Figure 3a), can leverage availability heuristic and make investing an popularity contest (violating guidelines B1 and B2). At NerdWallet we rate online brokers and robo-advisors according to account fees/minimums/investment choices/customer support capabilities/mobile app capabilities so that you can find your perfect partner! Read all our reviews at NerdWallet to find what suits your individual needs best!

ETFs

If you’re new to investing, ETFs are an easy and straightforward way to start investing. Through most brokerage apps and robo-advisors, they’re easily purchased and sold on. Plus they come in different asset classes so can help diversify your portfolio. Just remember to do your research first: examine management fees/commissions as well as price of shares compared with how they fit into your overall financial plan.

While ETFs first started out as baskets of stocks intended to mirror broad market indices, today they come in various markets and asset classes ranging from baskets of stocks designed to replicate broad indexes to those offering access to specific asset classes like stocks or government bonds. Investors generally find ETFs satisfying investments; many invest in traditional asset classes like equities and government bonds which benefit greatly from ETFs.

Mutual Funds

Mutual funds are an increasingly popular investment company that pool the money of multiple investors into one account to purchase securities that match specific investment goals. Mutual funds provide cost-effective diversification with professional management. Each fund may pursue specific growth or income objectives; some may even try to mirror market indexes.

Every fund maintains an estimated net asset value (NAV), or net asset value, which is calculated daily when markets close. This number serves to account for all purchases and sales made that day as well as all fees and expenses that have accrued to it.

When the fund generates income through dividends or interest payments, shareholders receive their proportional share according to their shares in proportion with any distributions that may be reinvested into further investments. A mutual fund’s expense ratio captures all expenses that it incurs and can have a profound effect on returns over time.

Cryptocurrency

Cryptocurrency is an alternative digital asset that acts like money without being tied to any government or bank. Instead of relying on third-party intermediaries to process transactions, cryptocurrencies use blockchain technology to record them all publicly in an online ledger – protecting investors against fraud while keeping its value steady because its price cannot be increased artificially by central banks seeking to manipulate its price.

Cryptos have enabled new financial ecosystems based on decentralized finance (or DeFi) applications, designed to provide traditional services like banking, lending and trading without middlemen like insurance companies or mortgage lenders. Examples include mortgage loans that do not involve title companies as middlemen and insurance without an insurer being involved.

Before investing in cryptocurrency, be sure to conduct sufficient research. While cryptocurrency investments have seen impressive returns since their creation, recent Fed tightening has raised interest rates dramatically and negatively impacted speculative investments particularly hard. It is therefore imperative that you carefully assess these risks and how your chosen investment app handles them.