The stock market’s volatility during the COVID-19 pandemic has proved alluring to some first-time investors who have been able to buy stocks at relatively low prices.
If you’re just dipping your toes into investing, you might be looking for ways to better manage your investments along with your uninvested cash. Whether you want to consolidate your checking and savings services under your brokerage account provider or seamlessly transfer your money into stocks with an app, there is a cash account or an app that can likely help you.
Read on to learn more about the different types of accounts and apps that you can pair with your investments to make your finances easier to manage.
Cash management accounts
Cash management accounts are a sort of hybrid account with checking and savings features, typically offered by brokerage providers. CMAs are not technically bank accounts, but CMA providers usually partner with banks to sweep customers’ funds into bank accounts behind the scenes so that customers get FDIC insurance on their money.
Many of these providers allow customers to open both a CMA and an investment account, which makes it easier to transfer money back and forth between investments and uninvested cash reserves.
These accounts made a name for themselves in 2019 when many were launched with high interest rates, some even around 2.00%. But in 2020, rates on most of them — as with many other financial products— have fallen below 1.00%.
CMAs’ allure these days has more to do with handy features like ATM reimbursements, bill pay, a lack of withdrawal limits and fees, and the ability to link cash management with investing under the same provider.
Investment app cash accounts
Investment apps like Stash and Acorns can help automate and streamline your investing efforts as well. Both charge fees for managing your money, but they can help beginners get started with investing almost like a robo-advisor, as well as offer money management tools like online banking services or retirement savings accounts.
Stash and Acorns both have the useful feature of rounding up users’ purchases and investing the difference. The apps also make it easy to automate investments and have no account minimums.
Peer-to-peer money transfer apps
Peer-to-peer money transfer apps, or P2P apps, allow users to send each other money by linking a bank account, debit card or credit card.
Most P2P apps just allow the basic functions of sending and receiving money, but some have other features. At least one, Cash App, allows investing. Customers can use the app to purchase stock with as little as $1, and there is a wide range of companies and categories to choose from. Stocks can be purchased with a user’s Cash App balance.
Investment accounts with integrated bank accounts
A number of financial institutions offer both investment and banking services. Ally, E*TRADE, Charles Schwab and others offer customers the ability to bank and invest under the same roof. But bear in mind that shopping around for separate accounts may offer you greater benefits than bundling, such as higher interest rates on bank accounts and lower fees on investment transactions.