Francetic Tax Resolution LLC - March 2021

ARE MICRO-INVESTING APPS A GOOD WAY TO BUILD WEALTH? EXAMINING THE PROS AND CONS

PROS

To outside observers — and probably quite a few people within — the world of investing is overwhelming. Nevertheless, common wisdom dictates that building investments, whether as part of a retirement plan or for other reasons, is an indisputably good thing, but it’s hard to figure out where to begin. Could micro-investing apps be a good place to start? WHAT IS A MICRO-INVESTING APP? Micro-investing apps, such as Acorns and Stash, allow users to invest small amounts of money in the market. Many of these apps will round up purchases made with a debit or credit card to the nearest dollar amount, then invest the difference in your portfolio. Other apps, like Clink, will encourage users to invest $1 per day.

a mutual fund with a 1% expense ratio, which would amount to a dollar per year. If you invest with Acorns or Stash, you’re paying at least $12 per year because of the flat $1 per month fee. That’s a 12% expense ratio, which is not great. And at the end of the day, micro-investing might be easy, but the fees and minimal investment amounts lead to mere micro-gains. So, if you’re looking for a way to familiarize yourself with the market and figure out how it works, micro-investment apps might be a good place to start. However, if you want to retire on your investments one day, then it might be best to invest somewhere that will net higher returns.

Most investing apps are incredibly user-friendly and require very little oversight. They offer tutorials on how to invest, give users some basic knowledge of financial markets, and make it easy to view your portfolio. The cost of the initial deposit is usually very affordable too, with Acorns starting at $5, Clink starting at $1, and Stash starting at just 1 cent. On top of that, the subscription fees are also very affordable, usually only costing users a few dollars every month. CONS As affordable as those monthly fees are, they can easily lead to a less-than-favorable expense ratio. For example, say you invested $100 in

SO, WE’VE RESOLVED YOUR TAX PROBLEM. NOW WHAT?

Meet Financial Representative Jonathan Nelson

Let me paint a picture for you. After weeks or months of working together, we’ve finally resolved your tax issue! Maybe we set you up with a payment plan with the IRS or wiped the slate totally clean. Either way, you want to get your finances back in order. So, what do you do now? When I have clients in this situation, I recommend sitting down with a financial representative like Jonathan Nelson, who has his own company in Racine called J. Nelson Financial Services. He helps people with investing, financial planning, college savings, retirement planning, and life insurance policies. When one of my clients needs financial help or wants to find out how contributing to an IRA can reduce their tax burden, he’s my go-to guy. “I have been in the business for about eight years,” Jonathan says, adding, “Often, my time is spent helping people with budget planning and getting things sorted out so they can do some future investing. I even do a lot of work with people who have lost a loved one and now need help processing all that stuff, getting their money, and getting the claims processed.”

One of the best things about Jonathan’s business model is you can get his expert advice for free. He makes his money by helping people like you find the right insurance company or investment account. Then, if you like the service enough to sign up, that company pays Jonathan. You get his valuable tips and perspective at no charge, which is great for people who don’t have time to learn about the whole financial system. “We all have areas in our lives that we are really, really, really good at. People should remember to focus on what they’re good at and what they like to do and get professional help for things they aren’t good at or don't really like to do,” Jonathan says. Jonathan is licensed to practice financial planning in Wisconsin and eight other states and can give advice to anyone. My clients have loved working with him and vice versa. To get in touch with Jonathan, you can email him at Jonathan.Nelson@MWArep.org, call 262‑221‑8299, or visit JNelsonFS.com.

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