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Investing apps have made it easier than ever for people to buy shares of their favorite companies. What used to be a complex and sometimes expensive process can now be done with just a few clicks from a mobile phone.
However, just like with traditional brokerage accounts, there can be a delay between when an investor funds their account and when this money is available for use. Thankfully, the industry has come up with a solution: instant deposits.
Investing apps with the instant deposit feature are a convenient way for investors to buy stocks, securities, or even crypto without having to wait several days for funds to transfer from their bank accounts. This means they can act immediately instead of letting market dips and other profitable opportunities pass them by.
In this post, I’d like to explore the benefits of instant deposit further and share five investing apps that will give you this ability.
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What is an Instant Deposit Feature on an Investing App?
When an investing app offers an instant deposit feature, they’re essentially giving users early access to their funds so that they can place a trade immediately.
Traditionally with banks, it can take roughly 3 to 5 days for the transfer to take place. This is because the request is first sent to a clearinghouse where it gets batched together with thousands of other requests. These batches are only processed every couple of hours.
Additionally, banks also have a strict process of checks and balances before they’ll approve the transfer. This is to ensure the transaction isn’t fraudulent or a potential instance of money laundering.
While the instant deposit feature doesn’t bypass these protocols, it does take a parallel step to essentially credit the user with these funds while waiting for the transfer to go through. This is more or less an act of good faith that the transfer will be successful, and the broker can then credit themselves once the funds arrive. To further reduce their risk, the investment app company will also usually limit the instant deposit to some small amount of approximately $1,000.
Why Do Users Want Investing Apps to Have Instant Deposit?
While conventional wisdom says to invest for the long term, there are times when a short-term investor may want to act immediately. For instance, maybe a stock or cryptocurrency is momentarily trading a lower price due to some news or event. When that happens, the investor might wish to purchase shares in hopes that they will go up in the near future and they can capitalize on the opportunity.
For someone who isn’t prepared, this can pose a problem. They’ll have to initiate a transfer and then wait for 3 to 5 days for the funds to become available for use.
For this reason, most brokerages will allow users to hold cash in their accounts that they can use for future purchases. But then this means parking money in an account that can’t be used for basic needs or earning interest.
This is where using an investment app that has instant deposit can be an advantage. They can seize the moment and make the trade immediately without waiting for the funds to clear or having cash already in the brokerage account.
Top 5 Investing Apps with Instant Deposit
For anyone who’d like to use an investment app that offers an instant deposit feature, here are five great options to try.
Over the past few years, Robinhood has become a household name synonymous with do-it-yourself investors. This was particularly true during the 2021 rise of such “meme stocks” as GameStop and AMC Theaters.
Robinhood users can open taxable brokerage accounts and buy any number of stocks, options, ETFs (exchange-traded funds), gold, and even select cryptocurrencies. This is all done through commission-free trades.
Robinhood is also well-known for being a friend to novice investors. They offer $0 account minimums and have made their interface so streamlined that some people argue they’ve made it too easy to use. They also offer a library of investment education basics designed to explain various topics in plain English.
Robinhood’s instant deposit feature allows basic users to invest up to $1,000 immediately after they request a funds transfer. For those who want higher limits, they can opt for a Robinhood Gold account.
Robinhood Gold offers users several tiers of instant deposit limits based on their account balance. Here’s how it works:
- For portfolio values under $10,000, the instant deposit limit is $5,000
- For portfolio values over $10,000, the instant deposit limit is $10,000
- For portfolio values over $25,000, the instant deposit limit is $25,000
- For portfolio values over $50,000, the instant deposit limit is $50,000
Robinhood Gold for free to try for the first 30 days. After that, users will be charged $5 at the beginning of each billing cycle.
SoFi is a fintech company that has aggressively worked to become a one-stop shop for all of your personal finance needs. Originally started with the goal of helping millennials refinance their student loans, they’ve now expanded their product lines to include nearly every financial need you can think of:
- Personal loans
- Credit cards
And, of course, investing!
Like other investment apps, SoFi lets its members make commission-free trades on stocks, ETFs, and select crypto. Investors who want to invest for the long-term can choose from a number of tax-advantaged IRAs (individual retirement accounts): Traditional, Roth, or SEP.
SoFi also offers users the opportunity to purchase what’s known as fractional shares. This is when an investor buys a portion of an expensive stock instead of waiting until they can afford a whole share. For example, if someone wanted to buy Amazon but didn’t have $3,000+ to invest, they could buy a fraction of a share with less money (such as $100).
SoFi members who want to invest immediately can pull money from their SoFi accounts (up to $50,000). If your funds were deposited using an external bank account, your instant funding limit amount is available to trade instantly.
Webull is another great investment app geared towards the do-it-yourself investor. They offer the ability to trade stocks, options, ETFs, and crypto. Users can even open an IRA if they wish.
Webull has competitive fee-free trades and requires a $0 account minimum. They also give users the opportunity to buy fractional shares with as little as $5.
For traders who are already comfortable with investing or looking for something a little more analytical, then Webull might hit the spot. Users get access to a full suite of analysis tools powered by the market data program “Level 2 Advance” from Nasdaq TotalView.
Investors can take advantage of the instant deposit feature up to $1,000. This applies to all trades except options.
Firstrade is another investment app option that focuses on ease of use. Originally started as a discount broker, the company has been servicing customers online since 1997.
Firstrade not only offers the ability to trade stocks, options, and ETFs, but users can also choose from over 11,000 different mutual funds. They do not, however, allow the direct purchase of cryptocurrencies.
Users of Firstrade can make commission-free trades and enjoy a no-minimum account. They can also open retirement IRAs and have access to a wide variety of research from Morningstar Briefing.com, Zacks and Benzinga.
Firstrade offers users an instant deposit of up to $1,000 while waiting for your funds to transfer.
5. TD Ameritrade
Of all the companies on this list, TD Ameritrade is likely the one with the most history. Starting back in 1975, they were one of the first companies to offer touch-tone phone trading during the 1980s. Recently, they’ve also partnered with investment behemoth Charles Schwab to offer an even wider variety of tools and services.
Like the other investment apps, TD Ameritrade offers commission-free trades on stocks, ETFs, and options. There is no account minimum required, and users have the option to open an IRA for retirement savings if they wish.
In addition, TD Ameritrade makes a wide range of third-party research from highly reputable sources available to all its users for free. This includes the latest news and reports from the Federal Reserve Economic Database, Center for Financial Research and Analysis, and Morningstar.
Since partnering with Schwab, TD Ameritrade has a vast network of professionals at its disposal. This means they can offer users 24/7 phone and online support. Investors who feel more comfortable meeting in person can even walk into one of the company’s 200+ branches and speak to an advisor if needed.
TD Ameritrade offers the ability to start trading in as little as 5 minutes after making a one-time cash transfer from your bank during regular trading hours.
How Much Money Should You Invest Through a Stock Trading App?
Investing is as personal as the individual performing it. Before someone can know how much money to invest, they have to first consider their financial goals, knowledge, experience, and tolerance for risk.
Generally speaking, most people are encouraged to invest for long-term growth. This is so that they can build a nest egg and retire once they have enough money to cover their living expenses for the rest of their lives.
People with this goal will want to use an investment app that offers an IRA option. The IRA option will provide them with tax-advantaged savings and make it so that they don’t have to pay taxes every year on their gains and dividends. Investors should also look to maximize their contributions so that they will have the best chances of growing their nest eggs.
For someone with more short-term ambitions, a traditional brokerage account will give them the flexibility to move money in and out of the app without complications from the IRS. While investing in stocks and crypto can sometimes be profitable, they will also carry an enormous amount of risk. Therefore, it’s important to be cautious.
For this reason, short-term investments should be limited to no more than 10 percent of your overall investment portfolio. This means that someone with a portfolio currently worth $100,000 shouldn’t invest any more than $10,000 on speculative assets. If this person is particularly risk-averse, then they should feel free to reduce this number down to 5 percent or even lower; whatever makes them comfortable.
Is the Money I Deposit in Investing Apps Insured?
Yes, but the protection can be very limited and potentially not work the way you think it does.
When it comes to account protection, most people typically think about the FDIC (Federal Deposit Insurance Corporation). This is when consumers are insured for up to $250,000 on traditional deposit accounts such as checking, savings, certificates of deposit (CDs), money market, etc. Since stocks and other related securities are non-deposit investment products, they do not qualify to be insured by the FDIC.
By contrast, investors do receive some level of protection from the SIPC (Securities Investor Protection Corporation (SIPC) ). This insures customers up to $500,000 per brokerage account, including a $250,000 cash limit. However, the type of protection is not the same as the FDIC.
Under the Securities Investor Protection Act (SIPA), SIPC’s role is only to provide recovery to those customers of a member broker-dealer that is in liquidation under SIPA or is the subject of a direct payment procedure. This means the broker must be part of SIPC and be in financial distress before you’d qualify to get any of your money back.
In no way does the SIPC provide any sort of protection to owners of stocks or investments that lose value in the market. Investing is risky in nature, and anyone who takes part must understand that there are never any guarantees.
Investing App Instant Deposits and Your Overall Strategy
Investing apps have revolutionized the way the brokerage industry works. Not only have they removed the traditional barriers to entry that kept so many people from participating, but they’ve made commissions a thing of the past and streamlined the user experience.
If that’s not enough, now the industry has one step further with the instant deposit feature. By offering users the ability to purchase investments without having to wait for their funds to clear, they can act quickly and take advantage of price dips when the market is just right.
However, remember that investing is never guaranteed to make money. There is always an inherent risk, especially for those people who choose to invest speculatively.
Before your next trade, carefully weigh the pros and cons. Be sure that it’s an investment that fits within your risk tolerance and will help bring you closer to your overall financial goals.