May 20, 2018
Assuming you haven't been living under a rock, you've likely noticed that, these days, there are a ton of different apps out there that help you manage your money. "Fintech" (as the cooler kids call it), stands for financial technology and refers to technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, and investment.
Since I am following Dave Ramsey's Baby Steps to financial freedom, and I am still on Baby Step #2 (getting out of debt), I haven't paid too much attention to any of these apps that make investments or retiring simple. In the Dave Ramsey world you first build up a $1000 emergency fund, then get out of debt as quickly as you can, then build up your savings to cover 3-6 months of expenses, and THEN you start focusing on retirement and investments.
For many people this may seem counterintuitive to wait until you get out of debt to start stowing money away for retirement, but what you must remember is that your income is your biggest wealth-building tool. If much of your income is going to your monthly debt payments, you're not able to utilize it as well as you should. So while the part of retirement and investments is, in fact, one of the most important steps in your money management plan, you've got a few steps to get out of the way first.
There's a great chance that many of you that are reading this article are ready for this step. Since I'm not well-educated in this topic quite yet, I've had a friend that is knowledgeable on it do a write up on his favorite apps so far.
Today's guest post is by my friend, Elliott Tate. Elliott is married to one of my best Houston friends and colleagues, Holly. Holly grew up as a Dave Ramsey follower, attending Financial Peace University classes when she was a mere 5 years old. They are homeowners, debt free, and are financial role models for myself and many others. They are also always up-to-date with the newest and best apps out there that help make money go further.
Elliott has been doing a ton of research and below he's listed the 3 best investment and retirement fintech apps that help your money work harder and go further. Enjoy!
Acorns is kind of like the old Bank of America “keep the change” campaign where it rounds up your purchases to the nearest dollar and invests the change. You won’t feel the extra .23 cents but you’ll thank yourself later. I’ve been using it for a month or so and have already saved around $75.
*Extra credit - they have partner businesses so you can get coupons that will straight into your investment fund. You’ll get 4% back from World Market and 1% from Apple. So why not get money back from purchases you’re already making?
You can use my invite link and get $5 just for signing up:
Link to get started: https://acorns.com/invite/86APDA
Think of Robinhood like Venmo for stocks. For example, put $100 into your Robinhood account, and buy any stock you want. Once you open your account, you can buy stocks without confusing fees. It allows you to experiment with the stock market with very little risk and no fees.
Use this link and you’ll get a free share of a stock you’ve actually heard of with no catch. Examples I’ve seen include Groupon, Sirius XM, and Chesapeake Energy. There’s also a 1 in 200 chance the free stock will be Apple, Facebook, or Berkshire Hathaway.
*Pro tip - Calculate what you might want to get before you put in funds so you don’t have too much cash remaining in your account that’s not being used. Example: You put $100 in, you spend $97 on a stock, and only $3 remains in your account.
Link to get started: http://share.robinhood.com/kristot24
This is the easiest way to open a Roth IRA when you either A. Don’t know where to start B. Don’t have much to put in or C. Don’t know what a Roth IRA is.
My wife and I felt all of A, B, and C when we had finally saved up enough to start thinking about retirement funds.
Essentially, a Roth IRA is a retirement savings account for an individual where you put in after-tax income (the opposite of a 401K). As long as you wait until your older than 59 ½, the amount your account grows into is 100% yours.
Here’s a little math to show you the importance: Putting only $100 in per year starting at age 30 yields you $14,791 when you are 65, but if you had started just 5 years earlier, that amount would be $21,361. So that $500 you didn’t invest cost you $6,570 in retirement. So the moral of the story is, put as much as you can in as early as you can, even if you think it’s not enough to be “worth it” because it is.
Good to know facts: The MAX you can invest per person is $5,500 per year, just FYI. If you’re married filing jointly and make over $189,000, you are not eligible to invest in Roth IRAs. If you make over $120,000 filing as an individual, you are not eligible to invest in Roth IRAs.
Even if you don’t have much to invest now, use this link and you’ll get an extra $5,000 managed for free, bringing the total you could invest to $15,000 without any fees. You start with $10,000 managed for free already. But don’t let those 0’s scare you. Even if you’re just putting in $100 or $1,000 per year, starting somewhere is what counts. I like Wealthfront because you’ll be able to grow into your account and make your starting investments go toward your retirement, not fees.
Link to get started: http://wlth.fr/1Z9Y2KI