We can all appreciate that we are living through a unique time in the world as we deal with a global pandemic that has led to the disruption of life as we knew it. Due to the restriction in movements and human interaction, many businesses scaled-down and others shut down. The result of the aforementioned is job losses or reduced earnings and therefore, the need for supplemental income to still make ends meet. This is where we come in by helping people make informed decisions on where, when and how to invest.
Recently, the increased market volatility and cropping up of online brokerage firms have necessitated the need for us to come up with an unbiased guide on the best investing platforms.
What is an investing platform?
An investing platform in our context refers to an online service allowing individuals and firms to sell, buy and hold funds. Investing can be approached in two ways:
Firstly, there is the direct to customer model where individuals invest directly on their discretion. Then via a financial advisor, where investors use a financial advisor in making an investment decision.
Before the widespread use of the internet, to invest one had to call their broker to place their order in the system. The It was quite a tedious process. Thanks to K. Aufhauser & Company, Inc. Who in 1994 offered the first online investment platform. Since then, the online investment space has grown in leaps and bounds.
Why use brokers? The leading industry players when it comes to investments are the large banks and large hedge funds. Retail traders cannot access the market circles these bigwigs operate in because of inadequate credit connections. This is where the brokers come in. Using the brokers’ credit connection to the big boys club, retail investors gain access to the otherwise unreachable investment industry.
Brokers provide retail investors with online platforms that play a hub that allows them to buy and sell their desired security. In addition to buying and selling, investment platform software will enable investors to:
- Analyze financial market activities.
- Monitor their accounts and portfolios.
- Evaluate the risk associated with a particular investment.
The most popular investment platform software providers include:
- MetaTrader 4; renowned provider of Forex, commodity, stock, and futures trading to both the institutional and retail trader. Is regulated and approved by the Financial Conduct Authority, FCA.
- eToro; according to many, the leading social investment network platform and at the forefront of the global Fintech revolution.
- E*Trade Web Platform; this is one of the pioneer websites for online investments and has kept evolving to keep abreast of current market trends.
The best investment platforms will provide both a downloadable version as well as a web-based version. Don’t forget that in the current world mobility is king. Choose an investment platform accessible from the palm of your hand wherever you are.
3 ways you can benefit from an investing platform
Why use an investment platform? Apart from the apparent reason of being able to invest at your convenience, as long as there is internet connectivity, using an investment platform has three significant benefits:
- Choice and Diversity; through a platform, investors gain access to an array of investment instruments to choose from facilitating the diversification of a portfolio. Remember the adage, “Don’t put all your eggs in one basket.”
- Control; with a platform, you have total control over your funds and invest them to achieve your financial goals. Monitoring your account 24/7 also means you can adjust your investments if need be at any time.
- Investments under one roof; investing platforms in nature are an administrative hub for all your investments. It means that you have access to multiple assets simultaneously, facilitating easy comparison and management.
Our picks for the best investing platforms
It is important to note that there is no ultimate platform; one man’s medicine is another man’s poison. It is all dependent on the ease of opening an account, investment instruments sought, level of customer service expected, learning materials provided, and the minimum deposit and withdrawal requirements. Based on these deliverables, we are confident the table below has a broker that will suit your specific investment needs.
How do investment platforms work?
As earlier mentioned investing platforms are online services that facilitate the buying, selling, and holding financial instruments. Platforms operate in an administrative capacity enabling investors to keep an eye on all of their investments. Platforms also offer investors’ access to assets that otherwise, retail traders would not be able to invest in. Besides, most investing platforms provide information on investment instruments and economic news that might affect these instruments.
Brokers don’t tell investors where to invest. Their role is to place your money in the chosen asset for a fee. The best that a broker can do is to provide information that will guide your investment decision. For their troubles, brokers either charge a percentage fee or a flat-rate fee. The price is for placing orders for you and using their platform to gain access to the larger financial market. Most brokers nowadays make money from spread and boast of having no commission fees. Spread is the difference between the asking price and the bid price; ask price is the price of buying an asset while the bid price is the price at which you can sell an asset.
For example, assuming in light of the global pandemic you wish to hold gold and are willing to buy it at £50 a gram. The broker looks for a seller willing to offload some gold at the price of £48 a gram. The £2 difference is what the broker takes home.
3 steps to using an investing platform
Finding a Suitable Investing Platform
When deciding on the ideal investing platform, first ensure that the instruments you are interested in investing are available. Second, ensure that the platform caters to your specific financial capabilities; the minimum deposit allowable is within your budget and the minimum permissible withdrawal limit, and all other charges are fair compared to industry standards.
It is of utmost importance to ensure that customer service support is in your preferred language, and via communication mediums at your disposable.
Learn the Basics
Before dipping your toes in the investment pool using investing platforms, remember that the broker does not give any investment advice. Therefore, you must choose a platform that provides useful information in making investment decisions and provides tools for market analysis and a demo account for practising.
Demo accounts are simulated investing platforms that allow traders to learn how the market works and develop investment strategies without actually risking their money. Once you are comfortable with how the markets work and have come up with investment strategies, it is time to fund your real money account and start investing.
Once you have chosen the ideal investing platform and have learnt the basics, all that remains is for you to make an actual investment. To start investing is easy, follow these three steps:
What are the advantages of using an investing platform
Why bother using an investing platform?
- Instant access to a large pool of investment instruments.
- A single investment administrative tool for a multitude of investments.
- Complete control over ones account and funds and real-time monitoring.
- Diversity in the choice of investment instruments available to trade.
- Cost-effectiveness; some investing platforms have tax-deductible benefits.
What are the disadvantages of using a investing platform
Some of the risks associated with using investing platforms include:
- Technology failure has been known to lead to unprecedented losses. Investing platforms purely rely on computers and internet connectivity for monitoring and glitches in either may result in losses.
- Addiction; investing platforms work on the premise of minimal risk for a maximum return just like in gambling. Investors interested in short term gains only may find themselves addicted to the markets, ultimately leading to substantial financial losses.
Expert tip on selecting investing platform
Remember that investing is all about making money. Therefore, ensure the investing platform choice made complements your financial goals. Seek out a platform with the best terms for the minimum deposit and withdrawal limits and has the minimum commission charges.
How to choose the best investing platform
What factors do you consider when choosing an investing platform to ensure your hard-earned money is secure? Below is a simple guide to help you choose the best investing platform.
1. Is the Investing Platform regulated?
A regulated platform ensures that the broker operates legally, and there is recourse in case of any misunderstanding.
2. What charges apply?
Ensure that they are no hidden charges and the costs of using the platform are within your budget. The cost of investing should not eat into your returns.
3. What devices can you use?
You should be able to make investments and monitor active investments at your convenience. As such, choose an investing platform not just available on desktop but also via a handheld device of your choice.
4. What are the available assets to trade on Investing Platform?
An investing platform should not limit you on what to invest on. It should have a plethora of investments instruments available for trading. Ensure the investing platform chosen lets you invest in what you want and not on what is available.
5. Is there a demo account?
Demo accounts let you perfect your investment strategies and understand how the market works. They are, therefore, are an integral part of the offerings by a platform.
6. What is the account minimum?
What is the minimum you can deposit, or withdraw or even use in investing? This information helps you choose a broker that matches your finances
7. What educational resources are available?
To grow and continues learning as the market dynamics change requires access to information and other educational resources. The best platforms are continually updating their educational resources and information pages.
8. Is there help and support available?
Customer support should be available 24/7 and across multiple mediums. The response time to queries should also be reasonable. Nowadays, instant messaging, online chats, is the way to go.
9. Can I use this from anywhere?
The best platforms allow users to access their accounts from anywhere.
Frequently Asked Questions
These range from MetaTrader, cTrader all the way to eToro’s Social trading platform.
Many begin using MT4 as it has an easy to use interface.
Investing platforms offer market analysis tools that help traders to make informed decisions when making trades. Most platforms share the same generic trading tools with an option of creating your own or combining the existing ones.
It takes less than 4 minutes to download and install an investing platform with reasonably decent internet connectivity.
An investing platform makes money through the fees it charges for using its platform and the commission it charges for placing an order and while withdrawing earnings.