MINNEAPOLIS — For many young adults, easy-to-use applications on smartphones and tablets are a popular gateway to investing.
Historically, there have been two major roadblocks to starting out with investments: the amount of time it takes to create a smart, safe portfolio and the cost to do it. Companies like Digit, Acorns and Stash are a part of a financial tech industry that, with the giant base of millennials in mind, is simplifying and lowering the cost of investing.
After analyzing income and spending habits, Digit withdraws and deposits a small amount of cash into a Digit saving account. Nearly $16 million was saved with Digit in March, compared with only $1 million a year ago, said Ethan Bloch, chief executive of the San Francisco-based firm.
David Ronick, co-founder and chief executive of New York-based Stash, said allowing first-time investors to get their feet wet in the market, while keeping risk low, helps spur investment.
Its app allows users to start with as little as $5.
"Investing doesn't have to be complicated," Ronick said. "You can buy a little and learn as you go."
After building up a nest egg, millennials can use Acorns and Stash to get into slightly more sophisticated investing, such as through the purchase of fractions of exchange-traded funds, which are a mix of stocks and bonds.
"There are a paralyzing amount of choices," said Jeff Cruttenden, co-founder of Acorns, which is based in Los Angeles. "Now that (the number of choices is) smaller, people can get in with less research."