Mobile apps designed to round up your credit and debit card purchases and then invest that change may sound like a quick way to make a buck, but experts tell us they’re better for saving than becoming a day-trading tycoon.
Financial planner Judy McNary is all about counting your coins.
She thinks these apps are interesting, but she says some lack options on what you’re investing in. Also, beware the fine print.
“It does it for a fee,” she said. “So it’s a dollar a month for the fee for that. So if you have about $15, $12 of rounded-up expenses, [that] fee can be really expensive.”
When you’ve racked up a bigger nest egg, those fees change.
By then, you should probably change your strategy anyway.
“If you have $5,000, you really should be putting that in a tax-deferred or tax-free account,” McNary said.
Your spare change can be put to better use anyway.
“If you’re working for a company that has a matching 401k offer, you do not want trade that for an app in your pocket” said Mandi Woodruff with MagnifyMoney.com.
But if you do want to invest on the go, other apps like E-trade are more customizable with investment options.
They let you play with more money, but they also have fees.
Woodruff suggests some newer options, like an app called RobinHood.
“RobinHood lets you basically trade for a fraction of that if not for free,” she said.
McNary says no mobile app is likely to make you rich.
But there is an upside to these apps: they’ll get you saving and maybe teach you a few things about investing.
“If you’re saving 63 cents or $1.24 every couple of days, that’s not going to build really quickly. But if it’s a good way to get a taste for [saving and investing], I think that’s great,” she said.
