The Dangers of Investing Apps
Presented by Marc Aarons
I’m often asked about investment apps–whether they’re a solid option, the pros and cons, etc. In the event you have wondered the same, I thought I’d reach out with the answers and advice I offer my friends, family, and clients.
The big picture is this: Investment apps are okay for a small pool of side money, but they aren’t ideal for reaching your long-term goals. Here’s why.
- Apps tend to gamify investing, and while that can add to the excitement, it also makes it easy for users to get in over their heads. The colorful interfaces and push notifications can lead investors to check their balances too often. Too much looking causes many long-term investors to be too sensitive to short-term market moves that nudge them to make quick, emotional decisions.
- They ignore the recommended “order” of investing. Tax-advantaged options like 401(k)s and individual retirement accounts (IRAs) should come first in your investment planning. Apps usually only offer taxable brokerage accounts, directing dollars away from the tax-free or tax-deferred growth of traditional and Roth IRAs.
- Risk is always present in investing, but investment apps often fail to assess a user’s risk tolerance accurately. Additionally, they don’t follow up to verify a person truly understood the risks involved.
- Apps force you to give up personal, one-to-one customer support. Conversely, when you invest with a broker and have a question or concern, you simply call and speak with your advisor. This is not always the case with investing apps, which may only offer email support.
Savvy investors realize that the purpose of investing isn’t to make quick profits but to put their money to work in a way that aligns with their short- and long-term goals and dreams.
If you’d like to discuss how you can best save for retirement, college expenses for your children or grandchildren, or a new home, give me a call or reply to this email. I’d love to review your portfolio and offer a free in-person consultation to help you maximize your earnings.
Reach out today–I look forward to hearing from you.
Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com
www.ocmoneymanagers.com
This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.
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