Cash App Investing: A Beginner's Guide To Getting Started

Cash App is an online banking and investing platform that offers commission-free trading of over 1,800 stocks and ETFs. It is a beginner-friendly platform that allows users to invest in stocks, ETFs, and fractional shares. The platform is accessible to US residents who are 18 or older and can provide a Social Security number, US residential address, employment status, and name of the employer. Cash App does not charge any commission fees, and users can start investing with as little as $1. In this article, we will discuss the step-by-step process of investing using Cash App, the benefits, and the potential risks involved.

Opening a Cash App Investing account

To open a Cash App Investing account, you must be 18 or older and a US resident. You will need to provide your Social Security number, US residential address, employment status, and the name of your employer. This information is required to verify your identity and comply with regulations.

Cash App Investing accounts are self-directed individual brokerage accounts, which allow you to buy and sell stocks and exchange-traded funds (ETFs). You can also buy fractional shares of stocks with as little as $1.

The balance associated with your Investing account is different from your Cash App balance. The "stock balance" is the total current value of your investments, and this is held by a third-party custodian, DriveWealth, LLC. The value of your Investing account is shown separately from your general Cash App balance.

To buy stocks using Cash App Investing, tap the Investing tab on the Cash App home screen, then enter the name of the company or its ticker symbol. Select the company, choose a preset amount or enter a custom amount, and follow the prompts to verify your personal information. Confirm with your PIN or Touch ID.

You can use the funds in your Cash App balance to buy stocks. If you do not have enough funds, the remaining amount will be debited from your linked debit card.

Once your order is filled, you can view your investment by tapping the Investing tab and scrolling down to My Portfolio. Stock purchases or sales can be scheduled 24/7, but orders will only be placed during market hours.

Cash App Investing does not charge any commission fees, and there is no minimum balance required.

How to buy stocks

To buy stocks using Cash App Investing, you first need to open a brokerage account. This is free to do and can be done through the Cash App. You must be a US resident, aged 18 or older, and able to provide a Social Security number, US residential address, employment status, and name of employer.

Once you have an account, you can start buying stocks. Tap the 'Investing' tab on the Cash App home screen, then tap the search bar to enter the name or ticker symbol of the company whose stock you want to buy. You can then select a preset amount or enter a custom amount of stock to buy. You will need to verify your personal information and confirm with your PIN or Touch ID. The stock can be purchased using the funds in your Cash App balance. If you do not have enough funds, the remaining amount will be debited from your linked debit card.

You can schedule stock purchases or sales 24/7, but orders will only be placed during market hours. The US stock market is open Monday to Friday, 9:30 AM–4 PM Eastern time, 8:30 AM–3 PM Central time, 7:30 AM–2 PM Mountain time, and 6:30 AM–1 PM Pacific time.

How to sell stocks

To sell stocks using Cash App Investing, follow these steps:

• Tap the Money tab on your Cash App home screen.
• Tap on the Stocks Tile.
• Scroll down to Stocks Owned.
• Select the company whose stock you want to sell.
• Select an amount or tap the "..." icon to enter a custom amount.
• Confirm the transaction with your PIN or Touch ID.

The amount from your sale will be automatically deposited into your Cash App balance. Depending on market activity, the sale proceeds can take up to one or two business days to be deposited into your Cash App balance.

It is important to note that selling shares may have tax implications. Consult a tax advisor if you have questions about your particular tax situation.

Cash App Investing fees

Cash App Investing accounts are free to open, require no minimum balance to be maintained, and do not charge any commission fees. However, there are certain fees that are mandated by government agencies like the SEC and FINRA. These fees are applicable across all brokerages and are disclosed prior to finalising a trade.

The Trading Activity Fee (TAF) is charged to brokerage firms by FINRA, a non-profit agency, to cover the costs of regulation, supervision, and operation associated with the securities market. The TAF for equity sales is $0.000166 per share sold, rounded up to the nearest penny, with a maximum charge of $8.30.

The Securities and Exchange Commission (SEC) fee is charged by the US Treasury to cover the costs of regulating markets and dealers. The SEC fee is $27.80 per $1 million of principal, rounded up to the nearest penny.

Other fees that may apply include external brokerage transfer fees and outbound stock transfer fees. It is important to note that Cash App does not take a portion of these government or regulatory fees.

To open a Cash App Investing account, you must be a US resident, 18 or older, and provide a Social Security number, US residential address, employment status, and name of the employer.

Cash App Investing alternatives

If you are looking for alternatives to Cash App Investing, there are several other trading platforms that offer similar services. Here are some options to consider:

• SoFi Active Investing: This platform offers a convenient way to manage your finances under one roof. It provides features such as $0 fees for stocks and options contracts, making it a cost-effective option for traders.
• Robinhood: Robinhood is a well-known trading platform that offers commission-free trading for stocks, ETFs, and options. It also provides access to crypto trading for a small monthly fee. Robinhood is known for its user-friendly interface and is a good option for those who want a simple, straightforward trading experience.
• E-Trade: E-Trade is a platform that offers a wide range of tools for investors, including charts, research, and data analysis. While it does charge commissions, it provides a comprehensive suite of features for those looking for a more advanced trading experience.

These are just a few examples of the many alternatives available to Cash App Investing. Each platform has its own unique features, fees, and offerings, so it's important to compare and contrast them to find the one that best suits your needs.

When considering alternatives, it's important to evaluate factors such as the range of investment options, fees, security, and the user interface. Additionally, consider your personal financial goals and risk tolerance to determine which platform aligns best with your investment strategy.

Frequently asked questions