The Entrance of New-School Digital Platforms

There are a ton of new-school digital platforms for investing that have surfaced during the past ten years, each of which makes investing more accessible and approachable for normal people. Millennials are the latest generation to enter adulthood. If you know nothing else about this generation, you know that they’ve had the deck stacked against them when it comes to finance. The financial crisis knocked the economy about, and it has been slow to recover since. Millennials have had a tough go of it, finding the beginnings of careers and homeownership to be slow going, if they go at all.

Nonetheless, Millennials (at least some of them) are proving to be very interested in investing. They know the value of long term financial growth, even though they may not have much in the way of startup capital. Millennials don’t want to stay poor forever. Some of them may have grown up with relative privilege, so they know what it’s like to have a bit more. Even if financial security is years or decades away, they’re ready to set the stage for it. That’s why new online investment platforms have come into the market, catering to these types of people. Different platforms allow users to begin with varying levels of risk, for varying levels of reward relative to time.

Examples of of New-School Digital Platforms

Motif Investing is one of these new-school digital platforms. They come in near the middle of the pack, in terms of the risk their customers take on. Motif’s model allows users to buy lots of stocks for very little money. Stocks and ETFs are sold in bundles called (you guessed it) “motifs”. Because ETFs are already diverse by their very construction, a single Motif might legitimately create amazing diversification in one go. These motifs sell for just $9.95, making them far cheaper than the a la carte investment brokers of the previous generation.

Motifs are typically organized by idea or concept. Motifs for “cancer research” or “precious metals” are available by the thousands. Users can see how these collections of stocks and ETFs have brought in returns for their owners, over months and years. Some motifs even mimic the portfolios of famous investors like Warren Buffett. Needless to say, it’s a fun and adventurous way to invest – and, for many people, quite profitable.

Other investment platforms like Betterment and Wealthfront offer users a lot more guidance when setting up an IRA or taxable investment account. These platforms have ready-made portfolios already put together, based on Modern Portfolio Theory. MPT is a way of creating very diverse, very affordable retirement accounts that grow reliably over many years. These platforms give people a lot of security, without the user ever having to think about the account at all, if they do not wish to.

Considered together, these three new-school digital platforms show how different novel internet brokerage platforms offer different value propositions to different kinds of users. All of them have very low barrier for entry, while giving low-net-worth users the promise of big returns. Of course, they’re also available to high net worth users, as well. Just as diverse as the generation they’re marketed to, new investment platforms are bringing trading to millions of young people.

This is a guest post by Jeremy Biberdorf. Jeremy is the founder of Modest Money. After working many years in the website marketing industry, he decided to take on blogging full time and also get his finances headed in the right direction.