4 Ways Technology Has Changed Investing

Technology has changed everything about our lives, including the way we spend, manage and invest money. From online investing to stock trading apps, investing is quite literally at everyone’s fingertips now, just a few taps away on a smartphone or a computer screen. People who want to start investing can watch videos to learn from financial professionals on the internet, and virtually everyone has access to a wide selection of investing apps. 

These are exciting times, but they can be overwhelming, too. Here are four ways that technology has changed investing, and how you can take advantage of these changes.

If you want to access sound investing advice from a professional, reach out to Farm Bureau.

1. Technology Has Removed Barriers to Beginning Investors

It used to be that a new investor had some serious hurdles to clear, especially if investing wasn’t something they’d seen a family member or friend do before. But everything is different now, and anyone can invest with just a few dollars and a smartphone.

Thanks to the rise of investing apps and online tools, it’s easier than ever to dip your toe in the investing waters. Participating in the stock market requires less time and money than ever before — you can start investing as little or as much as you want and watch the performance of your investments from anywhere.

This means that even young people or people who are just starting out in their careers and have modest means can try investing. Trading transaction costs have gone down, and it’s possible to invest in small increments. 

For instance, the Acorns app rounds your purchases to the next dollar and invests the difference automatically, with little to no effort. Apps like Robinhood give you the ability make commission-free trades at no cost, or even try buying cryptocurrency. And tracking your investments via company-specific apps is becoming common. 

While apps reduce the technical barriers to investing, they are no substitute for the knowledge of experienced financial advisors. 

1. Technology Gives Greater Access to Information

No longer do we have to pore over obscure charts and piles of statistics to understand how to invest our money. With up-to-the-second news and information at our fingertips on the internet, anyone can follow investment companies or market analysts, receive breaking news and track market performance minute-by-minute. Investors also have access to a wealth of information about companies, which makes pre-investment research faster and easier than ever.

Even those without a background in finance can benefit: Technology has made analyzing investment information faster and easier. Dashboards on apps and investment sites can track performance metrics that inform decision-making, and communication with your investment professional is almost instantaneous. 

Just be careful that your information sources are trustworthy; anyone has the ability to make a video and provide suggestions, but financial advisors have a legal obligation to prove that their recommendations are in your best interest. 

1. Technology Has Increased Market Volatility

On the flip side, technology also impacts how quickly markets move. Everything happens faster than in the past — people (and computers) can buy and sell at any time and from pretty much anywhere, which has made high-frequency trading and day trading possible.

This also means that a news headline or social media post can race around the world and affect markets drastically in moments. Because of this fast-paced environment, an increased number of novice investors follow daily and weekly trends, often without a long-term investment strategy. 

All of these factors have increased market volatility, which makes  having clear goals, timelines and quality advice from a trusted professional more important than ever before.

1. Technology Has Changed What We Invest In

Because technology impacts everything, it has not only changed how we invest but also what we invest in. Technology is the largest single segment of the market and is often seen as the hub of innovation. Advances in technology can reach across sectors, which makes the future potential of technology companies attractive to many investors. 

New innovations like artificial intelligence can become huge markets rapidly, making people wealthy but also presenting the opportunity for immense risk. The rapid cycles of innovation and the unknown future of regulations surrounding groundbreaking technologies contribute to the volatility of the market, but they also present possibilities for an investor with a strong understanding of their portfolio goals. That’s why working with a financial advisor can be such an important part of any investment strategy.

Invest Smarter

Technology has opened the door to new forms of investing and a new audience of investors. But an experienced advisor can be your best secret weapon, helping you understand your situation and make plans to weather times of change. Reach out to Farm Bureau today to discuss your investment questions or customize your investment strategy.