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Illustration by Melanie Lambrick

When it comes to investing, just like everything else these days, there’s an app for that. Rapid advances in technology had already spurred steady growth in the number of financial apps you can download to your smartphone. Then the pandemic hit, and according to a report by Environics Research, within a six-month period in 2020, the adoption of digital financial tools advanced by at least three to five years. That means a whole lot of people at home on lockdown took to investing apps, which let you trade securities and manage your portfolio through your phone.

Here’s the answers to some common questions about active investing apps.

What is an investing app?

At its most basic, an investment app is a simplified trading platform that lets users buy and trade securities on their mobile phone or tablet rather than a desktop computer (though some will let you do that too) or through a traditional full-service broker.

Investment apps are used for online trades of a wide range of investments, from stocks and bonds, mutual funds, ETFs or, increasingly, cryptocurrencies. Some apps let users hold investments in RRSPs, TFSAs or RESPs. Users choose their own investments and buy and sell on their own. (Robo-advisers which pick investments – typically ETFs – and buy and sell automatically can be considered a subset of the investment app universe.

Some charge a monthly fee, others charge instead by individual trades, and some are free of charge – at least initially.

How are investing apps different from other ways to invest?

Convenience, speed and ease of use are a claim to fame for most investment apps, and the brands therefore compete against each other to be sleeker, faster and cheaper than their rivals. Most offer a streamlined platform and simplified design for an easy and “intuitive” user experience that lets users skip a broker (and their commission fees). The big lure of investment apps, therefore, is a promise of low or no monthly fees, and zero-commission trading. A drawback is that if and when you want the advice of an actual human, you’re mostly out of luck. (You’ll likely get tech support and answers to simple questions, but no real investment advice.)

There are also in-app extra features such as finance news, market research, company data, and investment tips from money experts of all kinds, though these sorts of perks are often available as in-app purchases atop a free download. To get your business the apps advertise with sales and perks to join or upgrade. For example: “Get $50 in free trades!” or “Get two free stocks when you deposit $150!”

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Mobile-first investing apps like Wealthsimple Trade pressed established brokerages – including most of Canada's big banks – to modernize their mobile platforms to keep up with client demand.Jesse Johnston/The Canadian Press

What investment apps are available in Canada?

The splashiest investing app north of the border is probably Wealthsimple Trade. “It wasn’t just a mobile version of something else, it was just and only an app,” explains Jessica Moorhouse, money expert and CEO of MoorMoney Media Inc. Billed as Canada’s first no-commission stock trading app, Wealthsimple Trade launched in March, 2019.

Mobile-first and mobile-only brokerages like Wealthsimple then pressed established brokerages to modernize their mobile platforms to keep up with client demand. “Almost every brokerage in Canada now has some kind of investing app,” says Enoch Omololu, founder and CEO of Savvy New Canadians. Last year, Questrade launched QuestMobile, for example, while Interactive Brokers launched IBKR GlobalTrader in 2022.

The old-fashioned banks, meanwhile, are catching up with recently launching mobile apps for investors: CIBC Investor’s Edge, Scotia iTrade, TD Easy Trade, BMO InvestorLine and RBC InvestEase. Desjardins Online Brokerage uses the Disnat trading platform app. National Bank has an online brokerage platform but not an investing app just yet. None are quite as user-friendly, at this point, as more established rivals, Mr. Omololu says.

How much do I have to pay to play?

Just like you, investment apps want to make money. But their strategies vary.

Most Canadian investment apps make their money by charging per trade. A low trading commission is Questrade’s $4.95 charge, while the big banks usually hover around $10 for each buy or sell. Also, some charge a (low) flat monthly fee (Moka’s, for example, is $3) while others, like National Bank, charge $100 annually. Some charge a management fee on investment accounts, usually between 0.25 per cent (Questwealth Portfolios) and 0.5 per cent (Wealthsimple Invest).

Who is using investing apps?

Apps like Wealthsimple in Canada and Robinhood in the U.S. are a big hit with young investors. “Most of us were quite shocked how the introduction of these apps increased the participation in the stock market by people who had no interest or knowledge before,” Mr. Omololu says. He describes the boom in investing app development of the last few years of as “kind of a frenzy.”

These apps have made investing appealing and accessible to a new cohort of investors who don’t have large sums of money and a fancy financial adviser. “You don’t need a ton of money. You don’t even need a computer, just a phone, and you have ready access to start,” he says. “There is a very low barrier of entry here.”

Naturally, app developers always have demographics in mind. “These apps are pushed hard to Gen Zs and young millennials who are always on their phones, and on the go, so these apps feel like a game you play,” Ms. Moorhouse says.

The gamification” of investing is a hotly debated topic in the finance industry. On one hand, it’s brought new – and younger – traders into the market. Users often start with small amounts – even just $1 – and trade rapidly to grow their bottom line. All day, around-the-clock access to their portfolio lets these traders cash in quickly when the opportunity arises (though they can lose just as fast).

Who should avoid investing apps entirely?

Investment apps are specifically geared toward active traders who, at least theoretically, play close attention to market fluctuations. A user playing an investment app like a game, however, is likely not taking time for the careful research that you’d certainly do if that $100 on the line were $100,000.

Passive investors who would rather invest once and ignore bumps along the road are unlikely to enjoy the ups and downs that the app will reveal all day. Ample alerts and nudges from the app could be stressful and unwelcome to passive investors.

And other people will just never be comfortable buying stocks on their phone while distracted. “Personally, I like a bigger screen to make sure I don’t make a mistake,” Ms. Moorhouse says. “I use my phone for podcasts and YouTube, not investment decisions.”

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Young couple planning their finances, savings and investmentsNoSystem images/iStockPhoto / Getty Images

Are investing apps safe?

Misreading a teeny-tiny screen or accidentally clicking the wrong button with your thick thumb aside, investing apps are about as safe as banking on your mobile phone. Good privacy habits include all the usuals: Don’t use public WiFi, always lock your phone (preferably with face-recognition), choose a secure password and change it often, and never share your account information with anyone.

Although sketchy apps are a far bigger problem in the United States, be sure to choose a secure app that you can trust with your money and information. As usual, anyone investing anyone else’s money needs proper licences, which you can (and should) check with the Canadian Securities Administrators’ National Registration Search and the Canadian Investor Protection Fund‘s Member Directory.

Once you’re in and set up, one risk to consider – aside from the obvious risk of losing all your money via bad investment choices – is to your bank account via hidden fees or charges when you exceed limits. For example, some apps might lure you in with an enticing 50 free trades, then ding you hard when you hit 51.

The bottom line is even so-called free apps have to make money – and do. “If you want to buy a U.S.-listed stock or U.S.-listed ETF, they’ll charge you to convert your money and then charge you again to convert it back to Canadian dollars,” Ms. Moorhouse said. As always, be sure to read the fine print.

How do I get started? How much money do I need to start?

Assuming you already have a smartphone and a bank account, the first thing you’ll need to start is official identification and proof of address, which apps ask for to confirm your location (laws vary in different countries, and some apps that are legal in the United States are banned in Canada.)

For beginners, Globe personal finance columnist Rob Carrick recommends Wealthsimple Trade. “For a young investor just starting out,” he writes, “this option has a big advantage in that there are no commissions or fees for standard trades.” That said, a caveat: “Wealthsimple Trade arguably makes trading too easy and tempting, especially for rookies.”

And as far as money you need to start, good news: While some like Questrade have a $1,000 minimum deposit, others require a single dollar or nothing at all. The popular Moka app automatically rounds up your daily credit or debit card purchases, collecting your spare change and putting it into your investment account every week, no extra saving or financial savvy required.

How do I choose which app to use?

Do some research (this story counts!) and choose an app that best matches your needs, goals and experience. A hands-off investor who’s more inclined to buy and hold, for example, would do well with Questrade; someone who plans to do their own buying and trading all day would do better with Wealthsimple Trade’s no-commission model.

Here’s a bit of a Catch-22: Most users of investment apps might well fare better with a robo-adviser instead, a set-it-and-forget-it system where an algorithm makes all the decisions. But the personalities who want to use these apps do not usually want to outsource the fun of buying and selling.

“Personally, I’ve seen a lot of people these last few years who have lost a lot of money,” Mr. Omololu says. “And it’s more unfortunate because an increase in use of these apps corresponds with a decrease in other investments that would have seen gains.”

If you want the thrill of playing big without the actual financial risk, there are also many “investment simulator” apps that offer practice stock training without any risk at all. Virtual Stock Exchange offers a popular Canadian Practice Portfolio, while Questrade offers a free 90-day practice account with a million (pretend) dollars.

The bottom line about investing apps
  1. A slew of rookie investors took to investing apps during the pandemic, where users can buy and sell stocks and ETFs on their phones.
  2. Provided you choose a trustworthy app and have good privacy settings, investing apps are as safe as online banking
  3. Investing apps make money in different ways: Monthly or annual fees, a set charge-per-trade, a management fee or other charges, like converting currencies
  4. Since competition between apps is high, expect offers and promotions offering you free trades or free money to sign up. There are also hidden fees, so pay attention.
  5. As always, it’s best to know your risk tolerance and have a clear sense of your investment goals before you begin.

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