Over the past few years, we've witnessed a significant shift in the world of investing, as retail investors have taken center stage. This transformation has been made possible by a new wave of companies that are using technology to empower individuals to invest like never before. In this article, I’ll introduce you to some of these innovative companies that are reshaping the landscape of retail investing, writes Konstantin Rabin of LearnFX.
Robinhood (HOOD): Making Trading Accessible to All
Established in 2013 by co-founders Vlad Tenev and Baiju Bhatt, Robinhood has become synonymous with the drive toward democratizing the realm of investing. They did something revolutionary by introducing commission-free trading, effectively challenging the traditional brokerage model that charged hefty fees for every trade. With Robinhood, the fear of incurring substantial costs while trading stocks, options, and cryptocurrencies became a thing of the past.
What sets Robinhood apart is its user-friendly mobile app, which has resonated particularly well with younger investors. It's easy to navigate and understand, and it has played a pivotal role in bringing new investors into the fold. Robinhood also introduced the concept of fractional shares.
M1 Finance: Tailored Automated Investing
Launched in 2015 by Brian Barnes, M1 Finance focuses on simplifying the investing experience while providing users with greater control over their portfolios. The platform allows users to create "Pies," which are essentially customized portfolios comprising various stocks and ETFs. Investors can allocate different percentages to each security, and M1 Finance automatically rebalances their portfolios to maintain the desired allocation.
M1 Finance seamlessly combines the advantages of both robo-advisory services and the flexibility of self-directed investing. This unique blend empowers users to construct and oversee diversified portfolios that align precisely with their individual financial objectives and risk thresholds.
Acorns: Micro-Investing and Round-Ups
Founded by Walter and Jeff Cruttenden in 2014, Acorns has taken a unique approach by emphasizing micro-investing and passive saving. The platform rounds up users' everyday purchases to the nearest dollar and invests the spare change in a diversified portfolio. This "set it and forget it" approach seamlessly integrates investing into users' daily lives.
In addition to round-ups, Acorns offers automated recurring contributions and cash-back rewards that can be invested. This approach makes it easy for individuals to start investing with small amounts of money, breaking down the barriers to entry for many.
Stash: Investing with Educational Resources
Stash, founded by Brandon Krieg and Ed Robinson in 2015, has created an investment platform that combines investing with educational resources. The platform offers a wide range of investment options, including stocks, ETFs, and fractional shares, making it accessible to investors of all levels.
What sets Stash apart is its emphasis on financial education. The Stash platform equips its users with a wealth of articles, videos, and insights, all aimed at assisting them in making well-informed decisions regarding their investments. Additionally, Stash offers a feature known as "Stash Learn," which serves as a valuable resource by delivering educational content covering a wide array of financial subjects.
In conclusion, the rise of retail investing has been fueled by a new generation of companies that are leveraging technology and innovative approaches to empower individual investors. These companies have dismantled barriers to entry, making it easier for people from all walks of life to participate in the financial markets.