With the rise of financial technology, investment apps are becoming increasingly popular for retail investors looking to get started in the stock market. One such app that has been gaining traction is Chime, which launched its investing product Chime Investing in late 2021. In this article, we will take an in-depth look at the key features of Chime Investing, how it stacks up against competitors, and whether it’s a worthwhile option for beginner investors to consider.
Chime Investing makes it easy for anyone to invest in fractional shares commission-free, with no account minimums. This allows users to build a diversified portfolio and invest as little as $1 into thousands of stocks and ETFs. With its user-friendly interface and automated investing options, Chime aims to make investing more accessible. However, there are some limitations compared to full-service brokerages. We will analyze the pros and cons, fees, account options, and investment choices on Chime Investing to help you determine if it fits your needs.
Chime Investing offers commission-free trading and fractional shares
A key advantage of Chime Investing is that it provides commission-free trading on U.S. stocks and ETFs, with no minimums to get started. Users can buy fractional shares, starting with just $1. This makes investing more affordable, as you don’t need a large amount of capital to build a diversified portfolio. For example, you could invest $10 and own fractional shares of several companies like Apple, Microsoft, Amazon etc.
Fractional share investing has become popular in recent years, allowing investors to own a piece of expensive stocks. platforms like Robinhood also offer this. However, Chime Investing provides this benefit with no commissions.
For beginning investors, the ability to buy fractional shares commission-free is very appealing. You can test out investing and build positions in stocks over time by investing small amounts frequently.
Chime Investing offers both automated and self-directed investing
Chime Investing provides two main ways to invest:
1. Chime Automated Investing: This allows users to invest in curated expert portfolios tailored to their timeline and risk tolerance. The portfolios contain ETFs covering major assets classes like stocks and bonds. The minimum to get started is $1.
2. Self-directed investing: Users can buy and sell stocks and ETFs directly through the app commission-free. This gives more flexibility to pick individual investments.
The availability of both robo-advisor and self-directed investing is useful for different types of investors. Beginners may prefer the automated approach to easily build globally diversified portfolios. But for more active investors, the ability to choose stocks and funds is also there.
Limited investment choices compared to full-service brokers
While Chime Investing provides commission-free trading on over 1,000 stocks and ETFs, the selection is still limited compared to large brokerages like Fidelity or Charles Schwab. You won’t find access to mutual funds, options, bonds and more exotic assets.
For most core stocks and ETFs, Chime likely covers the basics. But if you want advanced trading tools or access to more asset classes, other platforms may be needed. This is because Chime Investing aims for simplicity over completeness in investment choices.
The relatively limited selection may be fine for casual investors looking to build a balanced stock/ETF portfolio. But active traders will likely find it restrictive.
Chime Investing lacks some features of full-service brokers
Compared to established brokers, Chime Investing does lack some key features that advanced investors may want:
– No retirement accounts like IRAs offered yet
– Limited research and charts compared to platforms like E*Trade
– No margin trading, options, futures etc.
– No ability to transfer existing investments from another brokerage
– Limited customer service agents available
So while the ease of use and fractional share trading of Chime Investing is compelling for new investors, the lack of robust tools and retirement accounts is a drawback. Chime Investing is still a relatively new product, so the feature set is not as extensive. But they are working to improve the investing experience over time.
Fees are straightforward but other free trading apps exist
Chime Investing does not charge any commissions for stock, ETF or fractional share trading. This makes the fee structure very simple and beginner friendly. However, there are a few other fees to be aware of:
– 0.5% management fee for automated investing portfolios
– Foreign transaction fees for trading non-U.S. stocks
While these fees are low, other investing apps like M1 Finance, Robinhood, and Webull also offer commission-free trading. So investors should compare all their options. The benefit Chime Investing provides is fractional share trading combined with robo-advisor portfolios. But fee-wise, it is comparable to other free trading platforms.
For investors who want an easy way to get started by buying fractional shares or utilizing robo-advisor portfolios, Chime Investing is a solid choice. The app offers a streamlined experience with zero account minimums. However, the lack of retirement accounts and limited features compared to full-service brokers are downsides to consider. Overall, Chime Investing is a good fit for casual investors, but more active traders may want a platform with more functionality.