As more people are looking to invest, there is an emerging influx of young investors signing up for stock trading accounts. As a result, companies promoting investment and trading apps to share trade information have also cropped up.
Currently, trading apps like Nachgefragt.net target young investors interested in the stock market for the first time. According to the recent Market Place survey, 15% of the current U.S. stock market investors attest to starting stock trading and investment in 2020.
However, the rising popularity has also attracted its fair share of criticism from financial advisors who feel that the apps are draining business away. But these are just divergent opinions as some advisors are hopeful that these trading apps are best suited to introduce young and first-time investors to financial planning.
The rush for young investors to join trading apps is becoming popular, and for good reasons.
Room to Recover
The best time to learn a new skill is while you are still young. Learning how to invest shouldn’t be any different. Of course, a few missteps are expected when learning new things for the first time.
When it comes to money matters, the consequences can be unforgiving especially, when you are past your prime age.
Young investors have the time and flexibility to take more risks and recover from investment errors. Your age determines the risk that you can take on. For young investors, they can recover losses through income generation.
On the other hand, young investors risk getting scarred from poor investment choices. Indulging in speculative trade may affect their future investment decisions. Without a solid investment platform, this can lead to young investors shunning investing or getting involved with risk-free assets that have lower returns at an inappropriate age.
Breaking the Barriers
The trading apps are beneficial because they do away with the barriers preventing young investors’ entry into stock trading. Today, you can take financial matters into your hands without over-reliance on financial establishments.
For instance, trading apps lower the barriers through fractionalization. Here, young and first-time investors can reduce risks by buying fractions of whole shares. Young investors may lack the funds to purchase high-value whole shares, and fractionalization allows first-time investors to cushion the risk on investments.
But in terms of risk management, young investors are at risk of succumbing to pressure from trading apps to join a herd of investors on an overvalued share. The perception is driven by lower costs which encourage unnecessary trade.
According to BBC Financial News, research shows that people with access to trading apps are likely to indulge in over-trading or take excessive risks.
Trading apps to young investors offer the opportunity to get higher returns on investments in the long term. Young people don’t have experience with money, which makes them spend the money they have as they get it. By doing so, they forfeit long-term ambitions and retirement plans.
If young people don’t save or invest while still young, this can lead to poor money-handling habits that they might carry into old age. Even though retirement seems a distance away, trading apps encourage saving and investing instead of spending.
Trading apps for young investors can also improve the quality of life and increase wealth in the short term.
Opening a trading account via an app is hassle-free, and you can do it within minutes. All you need is an internet connection, mobile device, or a PC to create an account and monitor your investments from wherever you are while carrying out other activities.
While the apps might feature brokers, the fee is usually subsidized, and you seldom interact with them unless necessary. Investors have various brokerage portfolio suggestions to choose from, depending on the app. The research is meticulous in saving time when making investment decisions.
Young investors can make guided trade investments, eliminating hiring a financial advisor. The power of trade is literally in your hands, and you can choose to buy, sell, or hold without the help of third-party brokers.
Trading apps offer an instant review and monitor investments by the minute, enabling you to set timely recourse. Because there isn’t any external interference, young investors have more control of their finances and investments.
The Bottom Line
Young investors have the advantage of age and should consider taking on more investment risks. By applying the stock trading fundamentals at an early age, the chances of building a reputable portfolio are rife.
One can sensibly explore many investment options because they have control of their finances at the opportune time. Before starting any trade investment, ask yourself what kind of investor you want to become.
Trading apps are suitable for young investors because they can make early investments to generate more wealth as they gain valuable experience for later life.