Square Cash: A Smart Investment Strategy For Beginners

Square's Cash App is a peer-to-peer money transfer service that allows users to send and receive money via their mobile phones. The app has recently expanded to allow users to invest in the stock market. Cash App Investing is free to use and allows users to purchase fractional shares of stocks for as little as $1. However, investing via the Cash App is limited to stocks or ETFs, and does not offer safer investment options like mutual funds and bonds. While the app is simple to set up and use, users should be aware of their investment goals before purchasing random stocks.

How to set up a Square Cash account

Setting up a Square Cash account is simple and can be done either on the Cash website or through the Cash app. Here is a step-by-step guide on how to set up your account:

Using the Cash App:

• Download the Square Cash app from the iTunes App Store or Google Play.
• Open the app and enter your mobile phone number or email address. Tap "Next".
• You will receive a confirmation code via SMS. Enter this code in the app and tap "Next".
• Confirm your first and last name and tap "Next".
• Add a Visa or MasterCard debit card, including the expiration date, CVV, and billing ZIP code.

Using the Cash Website:

• Go to https://square.com/cash/login.
• Enter your mobile phone number or email address and click "Request Authorization Code".
• You will receive a confirmation code via SMS or email. Enter this code and click "Log In".
• Confirm your first and last name and click "Next".
• Add a Visa or MasterCard debit card, including the expiration date, CVV, and billing ZIP code.

Once you have set up your Square Cash account, you can start using the app's features, such as sending and receiving money, investing in stocks, and more. Square Cash offers a convenient and easy way to manage your finances and investments.

The pros of investing with Square Cash

Square Cash App Investing is a free and fee-free investment platform. There are no commission fees for buying or selling stocks or exchange-traded funds (ETFs). The app is simple to set up and use, and you can start investing with as little as $1. This low minimum investment amount allows you to purchase fractional shares of companies, which means you can own a slice of your favourite company without having to buy a full share.

Another benefit of Square Cash is that it is already linked to your checking account, so you don't need to set up a separate investment account. You simply need to plug in a few legal details, such as your social security number, and you're ready to start investing.

With Square Cash, you can also spread your resources and invest in a variety of companies, rather than just one. The app provides access to analyst opinions, earnings, and other tools to help you make informed investment decisions. You can also set up orders to buy stock regularly or when it reaches your target price.

Square Cash also offers unique features like Cash Boosts, which provide discounts or cashback offers from linked merchants.

The cons of investing with Square Cash

While Square Cash App Investing offers a simple, free, and fee-free way to invest in stocks and ETFs, there are some drawbacks to consider before diving in.

Firstly, investing via Square Cash is limited to stocks or ETFs, with no option to invest in typically "safer" choices such as mutual funds and bonds, which are often more suitable for older investors. This limitation reduces the diversification opportunities for investors, particularly those seeking lower-risk options.

Secondly, the DIY nature of the app, with its push notifications encouraging regular engagement, may lead users towards riskier financial decisions. Historically, the more frequently one trades, the poorer the investment performance tends to be. The app's design, therefore, may nudge users towards impulsive or overly frequent trades, which could negatively impact their investment performance.

Additionally, Square Cash App Investing does not integrate with other Square apps and tools, such as the Square POS or your Square business account. It functions as a standalone, lightweight payments app, which may be insufficient for businesses seeking a comprehensive solution.

Another drawback is the high charge for instant deposits. While depositing funds into your bank account is free, it typically takes 48 hours for the money to clear, and this timeframe can extend to several days, depending on your bank. If you require faster access to your funds, Square charges 1.5% for instant and same-day transfers, which is higher than the industry standard of 1%.

Finally, Square Cash for Business offers limited customer support. There is no live phone or chat support, and users must rely on searching through the FAQs or sending a message through the app, which may result in delayed resolutions to issues.

In conclusion, while Square Cash App Investing provides an accessible entry point into the world of investing, it is important to be aware of its limitations and potential pitfalls. Users should carefully consider their investment goals and choose a platform that aligns with their risk tolerance and diversification needs.

How to buy stocks with Square Cash

The Square Cash App is a peer-to-peer money transfer service that also allows users to buy stocks and cryptocurrency. The app helps individuals manage their money and has a range of other features, such as free overdraft coverage, a 4.5% savings yield for direct deposit users, credit-building tools, and subscription management tools.

To buy stocks with Square Cash, you will first need to download the app and link it to your checking account. You will also need to provide some legal details, such as your social security number. Once your account is set up, you can start investing.

The Cash App allows you to buy fractional shares of stocks for as little as $1. This means that you can own a slice of your favourite company without having to purchase a full share. To buy a stock, simply search for the company name or ticker symbol, decide how much you want to invest, and click 'purchase'. You can choose a preset amount or enter a custom amount. Your stock purchase will be funded by the funds in your Cash App balance. If you do not have enough funds available, the remaining amount will be debited from your linked debit card.

It is important to note that investing in stocks carries risk and you may lose money. It is recommended that you do your own research and understand the risks involved before making any investments.

How to buy fractional shares with Square Cash

Square's Cash App Investing allows users to buy fractional shares of stocks and ETFs. Fractional shares are less than one full share of equity, and they are typically difficult to sell. With Cash App, you can buy fractional shares of a company's stock with as little as $1.

Step 1: Research the fractional shares you want to buy

Fractional share offerings differ between brokerages, so it's important to know which stocks you want to invest in via fractional shares to help determine which brokerage to use.

Step 2: Open a Square Cash App Investing account

Since the Cash App is already linked to your checking account, you won't need to set up a separate investment account. However, you will need to provide some legal details, such as your social security number.

Step 3: Fund your account

You can fund your Cash App account using the funds in your Cash App balance. If you don't have enough funds available, the remaining amount will be debited from your linked debit card.

Step 4: Buy fractional shares

Search for a company name or ticker symbol, then choose how much of the stock you want to buy. You can select from a preset amount or enter a custom amount.

Step 5: Monitor your investment

You can view your investment by tapping the "Investing" tab on your Cash App home screen and scrolling down to "My Portfolio". The Cash App also provides various tools and notifications to help you track your investments.

It's important to note that fractional shares may have limited liquidity and can be challenging to transfer to another broker. Additionally, they may complicate your tax returns, as you may end up holding multiple tax lots.

Frequently asked questions