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Do investment apps live up to their hype?

20/05/2021

In the UK, more and more younger people are beginning their investment journey for the very first time. Many of these people are attracted, as we’ve explained before, by the fact that it has become easier to invest than ever before, thanks to the rise of trading apps which give them complete control over their portfolio via their mobile phone, and often offer a fee-free approach. 

But are these apps really as good as they seem at face value? 

Why are trading apps so popular?

Quite simply, investment trading apps make investing more accessible for younger audiences. Rather than having to go through a traditional broker, it’s as simple as downloading an app (which could be chosen based on a friend’s recommendation or one of the many “best apps” lists that can be found online), registering and building a portfolio.

The apps allow users to put their money into various investment types, from stocks to cryptocurrency, and include dashboards to make it easy to see how each investment – plus the portfolio as a whole – is performing. 

What are the problems with these trading apps? 

Earlier this year, the FCA warned that younger investors who use trading apps may be choosing products and relying on advice from social media that may not be wholly suitable for their needs or their situation. Cryptocurrency and forex are becoming more and more widely advertised across channels from Instagram to TikTok – high-risk markets that are seen by some to be more like gambling than investing. 

Investors’ Chronicle, in fact, talks of “the trading game”. While they praise these apps for “breaking down barriers in financial services so more people can get involved”, they also suggest that the gamification of investing could be a slippery slope for inexperienced investors.

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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