Dividend yield investment apps are popular with younger generations who lack the financial resources to trade in the stock market. They require a lot less start-up capital than traditional methods of investing or stock trading, and they’re relatively simple to work out.
It’s been a challenge to demystify and showcase low-cost, low-risk options to start developing your nest egg by financial professionals and fintech startups, and dividend yield investment apps have been a boon for the industry – reshaping it and welcoming in a new generation.
Low-cost roboadvisors and spare change dividend yield investment apps take much of the guesswork out of managing your assets.
Dividend yield investment apps which enable you to start investing with a little amount of money eliminate the excuse that you must have a large amount of money to start trading in the stock market, but they aren’t always useful to all investors.
The following are some of the advantages and disadvantages of utilising dividend yield investment apps.
Low cost threshold
Many dividend yield investment apps only require a small amount of capital to get started, quickly dispelling the assumption that you need a lot of money to start investing. In some cases, you don’t need much more than a few dollars to get started. For a few days, you may save money by skipping your morning coffee (or other expensive, unnecessary habits) and use that money to begin investing.
These ‘micro’ dividend yield investment apps often have very small fees (sometimes no fees) for small accounts, which is another perk.
Those with accounts under $5,000 for example may only pay a few dollars a month in order to invest. Sometimes extra fees are charged to invest in certain types of accounts.
If you’re new to investing, this is a great place to start.
Easy to use
Dividend yield investment apps are often very user-friendly. You may open an account in a matter of minutes and monitor the development of your dividend yield investments, as well as analyse your possibilities.
On some platforms, you won’t have to worry about choosing and trading stocks once you’ve set up your account. Depending on your risk tolerance, your money will be invested in a portfolio of Exchange Traded Funds (ETFs).
Even if you stop contributing regularly, you can still see how much money you’ve made over the course of many years. Many of these small micro plans work automatically, which is great for beginners. On some, you can choose the style of company you’d like to invest in.
Larger accounts are subject to higher costs
You might wind up paying more in the long run if you put more money into these kind of platforms, rather than just going through a traditional financial advisor or broker.
They can still be very cost effective, but if you’re investing large sums of money, you’re probably better off going through traditional avenues.
Many of these platforms charge a fee based on the amount of money you have invested. In reality, these applications aren’t built to handle significant sums of money. If you have enough money to invest, you may discover lower costs elsewhere.
Fewer choices for customising your account
Investors may only be allowed to open one taxable account using these applications. If you have long-term investing objectives in mind, this may restrict your alternatives.
What to remember
Beginner dividend yield investors and students on a tight budget may find “spare change” platforms handy since they don’t want to deal with complicated procedures or services.
You should carefully evaluate the advantages and negatives of this type of platform, as it is a financial decision. You don’t want your funds being swallowed up by the additional fees after your account hits $5,000.
People who want to invest in individual stocks, or who can afford to invest more than $5,000 in a calendar year should look into other options.