Whether you’re a beginner when it comes to investing or an experienced trader, it’s never been easier, thanks to the wonders of modern technology. The latest apps for smartphones and tablets can get you started and help you manage and monitor your investments, all from the palm of your hand.

There are simple automated tools that will give you lots of help, right through to more sophisticated apps for those in the know. The choice is yours. However, the world of investing can seem daunting for newcomers. With so many investment apps on the UK market, you may feel in need of a bit of guidance.   

Getting started with investment apps

What is an investment app? Before we answer this question, let’s go over the basics. First, what is investing? Investing is putting your money into a commodity in the hope it will increase in value. However, it can both increase or decrease in value, meaning you can lose money if you don’t invest in the right things. Investing is often considered an alternative to traditional saving. You would put your money into an account and earn interest. 

You can invest in many ways, but usually, investing means buying stocks, shares, bonds, funds, property, cryptocurrencies, or more speciality commodities like wine or art. For most, though, it means dabbling in the stock market.

Investments are often broken down into two types – passive and active. We’ll have more on this later. The most important thing to remember when it comes to investing is that there are no guarantees – you could make more money or lose it. If you are thinking about investing, you should think carefully about how much risk you are willing to take with your hard-earned money.

Next, we’ll explain apps. Apps are applications on a smartphone or tablet. New apps can be downloaded for free or at a cost from the App Store or Google Play, depending on your phone. From games to dating to online banking, there’s an app for almost everything. The same goes for investing.

What is an investment app?

Investment apps are a way of putting money on the stock market or other types of investment using your smartphone or tablet. They have been designed for ease of use. They offer a range of services you would typically only get through a financial advisor or stockbroker.

Different types of investment apps are available, letting you invest in stocks and shares or round up your spending and invest your change.

Why use investment apps?

Investment apps, like many other kinds of apps, have gone through a boom in recent years. Let’s take a look at some of the reasons for their popularity and why you might want to use these handy apps:

  • Simple to use

  • Easy keep track of investments from your device

  • You can manage your investment portfolio 24/7 from anywhere

  • You can start investing in minutes

  • Investment apps are often cheaper than other forms of investment, like paying for a financial advisor

  • Ideal for beginners

  • They’re also helpful if you have good knowledge of investment and can make the app’s functionality work for you with instant access and direct control

Investment apps as a source of passive income

As we mentioned, investing can be a source of passive income. This is a source of revenue that continues to come in even after the work is complete. In this case, the work is the time spent investing. 

Passive income is different from passive and active investing. Passive investing is cheaper and usually involves investing in funds that track the market. In contrast, active investing is much more hands-on and is typically not recommended for a beginner. It typically requires a financial advisor or stockbroker to make critical investment decisions for you. 

While passive investing tracks the market, active investing tries to get ahead of the market and beat it. On the other hand, passive income can include various revenue sources coming from work that’s already been done or going on in the background. That’s precisely what many investment apps do – you sign up, link them to your bank accounts, and let their algorithms do the work.

How do investment apps work?

Like other financial apps, investment apps use something called open banking. Open banking was introduced in 2018 and has been a revolution for banks and consumers. It allows consumers to safely and securely share their account information and data – including transactions, where and what money is spent, and more – with third parties. 

It’s all about opening up banking data to help consumers make the right financial choices. This includes linking bank accounts to money managing apps like savings and investments apps. Open banking has led to increased transparency and competition and forced traditional banks and building societies to up their game. In many ways, open banking aims to make all banking as intuitive as using a smartphone.

When you sign up for an investment app, you need to give the app permission to access your bank account and data. This will allow the artificial intelligence (AI), or algorithm behind the app, to build up an accurate picture of your financial situation and behaviour, including how much you can afford to save or invest. Your app can then offer tailored financial and investment advice and automatically invest money on your behalf. 

Are some investment apps better than others?

The quick answer is yes. Not every investment app was created equal. Like every product out there, you’ll find excellent and not-so-great investment apps on the market. The companies behind them might promise great things to get you to download and sign up. Still, it’s essential to do your research, read independent customer reviews, and compare a range of investment apps to find the one for you.

What should you look for when choosing an investment app?

Here’s what to ask and look for when picking the investment app for you: 

  • Asset variety – in other words, what can you invest in? This could be important if you only want to invest in certain commodities; for example, if you’re going to stick to ethical investing

  • Does the app use Robo-advisors, DIY investing, semi-DIY, or a mix of all 3?

  • Commissions, fees, and charges including setting up, trading, transaction, exit fees, or monthly and annual charges

  • A minimum investment amount

  • Will your money be protected by the Financial Services Compensation Scheme (FSCS)?

  • Are there any penalties for withdrawing money?

  • Social trading – this allows you to follow other traders’ public profiles and see how their portfolios are performing; some apps also have message boards so you can get advice and communicate with other investors

Best investment apps in the UK

When it comes to the best investment apps in the UK, it is really about the right app for you and your circumstances. How much do you want to invest? What do you want to invest in? Are you a beginner or experienced investor? What is your appetite for risk? 

The answers to these questions and more will help you identify the investment app that best fits your needs. The UK market has seen considerable growth in investment apps over the last few years. Many companies are competing for your money, so it’s essential to shop around and do your research. 

With names like Fidelity, eToro, Hargreaves Lansdown, AvaTrade, IG, Wealthify, Nutmeg, and Fineco flying around, it’s easy to get overwhelmed. That’s even more of a reason to read up on potential providers.

Next, we’ll take a look at some of the UK’s most popular investment apps and run through the differences between them to help you identify which might be right for you. 

Best apps to invest in stocks in the UK 

Stock investing apps allow you to buy and sell shares on the stock market. This can be passive and active investing, Robo-investing, and a DIY approach for more experienced users. There are apps to cater for every type of investor. Apps to invest in stocks in the UK include:

eToro

This investment app allows you to buy and sell stocks and shares on the world’s biggest stock exchanges, including London and New York, as well as more than 15 cryptocurrencies such as Bitcoin. 

Cryptocurrency (virtual or digital money) is one of the fastest group forms of investment. eToro’s investment app is known for its intuitive and user-friendly design. Social trading is also one of its many selling points, thanks to a community of 12 million customers. 

Hargreaves Lansdown

A well-established provider from the UK, Hargreaves Lansdown offers shares, funds, bonds, competitive rates, and an impressive app. The app features include superfast login with fingerprint or facial recognition, live share prices, news and research materials, and the ability to link family accounts in one place.

IG

This app is definitely worth mentioning for its choice, with access to more than 10,000 shares, funds, and trusts. IG has a well designed and easy-to-use app and a standalone app called the IG Academy for teaching beginners about the world of investment. Their minimum deposit is higher than others at £250, but the apps are highly rated.

Wealthify

One of the Robo-investors we mentioned earlier, Wealthify, offers diversified portfolios, which can be good for spreading the potential risk. You can also invest from just £1. When it comes to Robo-investors, also look out for names such as Nutmeg –the UK’s most prominent with £1.7 billion invested for 70,000 customers.   

This is just a small selection of the investment apps for stocks available. 

Apps that invest your change in the UK

Another type of app works differently to invest or save your money by rounding up the money you spend during transactions to the nearest pound and investing the difference. 

This is similar to Robo-investing, where beginners, or users with less time, hand the reins to AI and algorithms. These programmes work out what users can afford and where’s best to invest it.  

Moneybox

Moneybox rounds up your spending and invests the difference. For example, if you bought something costing £2.80, Moneybox rounds it up to £3 and invests the spare 20p. You can pick from three levels of risk: cautious, balanced, or adventurous. 

The idea is that the amounts are so small you don’t notice them being invested; it’s like putting your change in a jar rather than keeping it in your pocket.

This is just one example of an app that invests your change from the many available in the UK. Other examples include Tandem and Monzo. As ever, you must do the research to find the right app for you before investing.

How much should I invest?

You do not need a small fortune to start using investment apps. This is one of the big pluses of using apps – you can start investing with as little as £1. One of the most important rules is never to contribute more than you can afford. 

Typically, experts also recommend paying off any existing debts before investing. This is the same advice you would receive if you were considering opening a savings account. If you think you have enough spare money to start investing (or saving), but you have outstanding debts, it’s usually best to pay those off first. Otherwise, you’ll be saving money in one hand and letting it go in the other. 

Suppose you have no debts or you’ve already paid them off, and you’re confident you have the disposable cash to start investing. In that case, the exact amount depends almost entirely on your personal circumstances. While investments of £10,000 could be a huge amount for one person, it could be a drop in the ocean for another. One way to look at it is this – only invest what you could afford to lose.

Are investment apps safe?

The nature of open banking – sharing your financial data with third parties – has raised some safety concerns. Still, there are safeguards built-in, and data is usually heavily encrypted and anonymous. 

The third party won’t ever get your login credentials or access to data you haven’t released. In addition, companies that want to use open banking must be approved and regulated by the Financial Conduct Authority (FCA). Still, you should remain vigilant for scamming and phishing attempts – even if you’ve opted out or decided not to use open banking. 

In the UK, investment apps should be authorised and registered by the Financial Conduct Authority (FCA). In most cases, this should mean your money is kept separate from the company’s own funds so that if they go bust, your cash is safe. This isn’t as much protection as you would get when investing through a UK bank. So if you are concerned about safety, then it’s always sensible to check the company’s status with the FCA before proceeding. 

One of the best ways to make sure your money is safe is to ask if the company is protected by the Financial Services Compensation Scheme (FSCS). All UK banks and building societies are signed up as standard. If they are, funds up to £85,000 per person per institution can be refunded if an organisation goes bust. 

What is peer-to-peer investing?

While investment is often in stocks and shares, you can technically invest in almost anything. In the last few years, there has been a growing interest in peer-to-peer investment, which can offer much higher interest rates than traditional savings accounts. 

Peer-to-peer investment means lending your own money to individuals or businesses you are matched up with that need a loan. By cutting out the middleman, borrowers benefit from competitive loan rates. At the same time, investors earn more interest than they would in a traditional savings account. 

Peer-to-peer investment is facilitated by a third party, like Zopa, Funding Circle, Ratesetter or Lending Works in the UK. It can be done through an app. This could be an alternative to investing in funds and shares if the stock market is not for you.

Another alternative to investment apps, especially for those worried about the risk, is to open a traditional savings account or go for an investment ISA. 

What are the golden rules of investing?

When it comes to investment best practice, the same golden rules tend to apply to whichever platform you’re using, including the latest apps. Let’s take a look at the most essential things for would-be investors to remember:

  • You need to play the long game – experts recommend investing for a minimum of 5 to 10 years to give your investments time to grow

  • Never invest more than you can afford

  • Make sure you understand the risks before investing

  • Significant returns usually equal more significant risks

  • Diversify where possible – invest in different things to spread the risk and give yourself a better chance of success

  • Regularly review your investment portfolio and make changes if you need to

  • Investments go up as well as down; you could make big money, but you could also lose some

These rules apply to whatever investment method you choose, from traditional options to the latest investment apps.

A final note on investments apps

Investing can be a great way to grow your savings, provided you understand the risks involved. 

Apps simplify the process, so anyone can try their hand at investing. They’re easy to use, offer intuitive features, and automated functions for those who want a helping hand. There are also lots of more advanced features for experienced investors. Whether you’re a beginner or a professional trader, apps are a quick and easy way to invest your money in the digital age.


4 June 2021