Reading the Fine Print: Schaeffer’s Investment Research Review on What You Need to Know About Investment Apps
Popular, low-cost investment apps have opened up investment opportunities, including in stocks and options, to a lot of people. In the past, investing was often very expensive, with a single transaction costing $30 or more. Schaeffer’s Investment Research Review notes that you can now find apps that allow you to trade for free. However, before signing up for any investing app, you need to understand the “fine print.”
Investing is inherently risky. Schaeffer’s Investment Research Review notes that even great investors like Warren Buffet make bad picks from time to time and lose money. When you rely on apps and brokerages to conduct trades, there are also some risks involved owing to the way markets, apps, and brokerages work. When signing up for an investment app, Schaeffer’s Investment Research Review recommends that you not only develop an understanding of investment markets but also how the apps themselves function.
Perhaps most importantly, some investing apps can restrict trading. Many people investing in Gamestop stocks in February 2021 found that out the hard way.
Schaeffer’s Investment Research Review Talks About Why Investment Apps Restrict Trading
Gamestop stocks became very popular among traders using investing apps. Many traders thought that big institutional investors were undervaluing Gamestop through short selling. When you short sell a stock, you’re betting that prices will go down, not up. Schaeffer’s Investment Research Review notes that through free and low-cost trading apps, some investors bought Gamestop stocks, pushing prices up.
Some trading apps, including free trading apps, saw the huge stock price increase and restricted trading on those stocks, limiting how much people could buy. Many investors believed that this unfairly interfered with the market and were shocked that apps restricted trading. Reading the fine print, however, investors learned that these apps gave themselves outs for restricting trades.
Schaeffer’s Investment Research Review Talks About Other Important Fine Print Details
Investing apps can be a bit confusing, and at times your portfolio balance may not accurately reflect the real amount of money in your account. Schaeffer’s Investment Research Review advises that investors understand how specific apps work and how account balances are displayed. Some people have logged into their app and seen huge losses, but in fact the losses weren’t real.
Many free investment apps also offer limited customer service options, and sometimes it’s difficult if not impossible to talk to a live person. Schaeffer’s Investment Research Review advises investors to closely consider customer service options when selecting an app. If something does go wrong or there is confusion, being able to talk with customer service promptly may prove vital.
Many investment apps have also made it easier to trade complex instruments like options and other derivatives. These complex financial tools are often characterized as high risk. In truth, options can be high risk, especially if you don’t have an understanding of what you’re doing. Options can also be used to hedge bets and protect your portfolio, acting similar to insurance.
Still, before investing in a specific instrument, you should understand how they work. When trading complex financial instruments like options, it’s wise to speak with an expert. If you have any questions about options or other investment vehicles, speak with an expert at Schaeffer’s Investment Research Review.