These apps and companies are time-tested, have strict cybersecurity policies and features (like two-factor authentication and biometric logins), and work with advanced encryption. Of course, they’re also SEC-regulated and SIPC-insured, meaning they’ll cover losses in the case of unauthorized activity in your account. If you’re concerned about your privacy when trading stocks, you’ll want to pick either of our top two picks, since these platforms don’t engage in payment-for-order-flow — the selling of your trading data to third-party Wall Street firms. If you’re looking for extra privacy and protection when conducting financial transactions, make sure to always use a VPN. We recommend NordVPN. It’s important to use apps from companies that have a proven track record of no data breaches and advanced security protocols. Of course, you’ve got to factor in usability, features, and how they use your personal data. We’ve reviewed quite a few investment apps, and while no app is perfect, we’ve shortlisted our top three that excel in security, privacy, and usability.
Top 3 Investment Apps for Safety and Security
We’ve compiled a list of the best stock trading apps when it comes to safety, security, privacy, and functionality. These are apps we’ve reviewed ourselves, and each has stringent cybersecurity policies and is well-rated among independent security analysts. These three best investment apps also haven’t had any significant data breaches or cybersecurity incidents in recent history.
1. Merrill Edge: The best and safest investment app
Merrill Edge is Bank of America’s investing app. It provides the safety and security required from stock trading apps and is a particularly good option for Bank of America customers who are looking to keep their financial activity under one roof. It doesn’t engage in payment-for-order-flow, which we appreciate. More on payment-for-order-flow will be discussed later. Analysts give the company top-level security ratings, and they haven’t had any significant data breaches since 2012. Merrill Edge has reported that there have been no losses or consequences from tech failure, cyberattacks, or data or security breaches over the past four years. While Merrill Edge offers excellent security features and protocols and passed our usability tests, it does do some aggressive marketing with your personal information. You can opt out of data collection online, but you may have to call a phone number to ensure they collect and use as little on you as possible.
Useful security features of Merrill Edge
Merrill Edge takes the necessary cybersecurity measures that keep securities and funds safe from outside attackers. They also provide you with all the security features you’ll need to protect your account. Here’s a rundown of what Merrill Edge offers you security-wise:
Biometric logins: Use facial recognition or fingerprint scans when logging on via mobile. Two-factor authentication: Log in or verify your identity by receiving a code through your authentication app, email, or SMS. Personal authorization code: Create a personal authorization code for phone or online confirmations. Automatic logouts: Merrill Edge automatically logs you out if you’ve been active for an extended time. Failed logins: After a limited number of failed logins, no further attempts are allowed. Free fraud protection software: Customers have free access to fraud protection software from IBM’s Security Trusteer Rapport. Informational website: The Merrill Edge website offers plenty of cybersecurity tips and guides.
How Merrill Edge keeps you safe
Merrill Edge tops our list of best investment apps due to its security. It has strong firewalls and protects its data with 128-bit encryption. Every time you log into Merrill Edge, you’re getting a secured, encrypted connection to the platform, whether it’s on mobile or browser. Passwords, biometrics, transactions, and financial or otherwise sensitive personal data are coded and can’t be read by third parties when transmitted through the site. They’ve got 24/7 customer service via phone and email, though many reviews have reported long waiting times for replies. Merrill Edge offers SIPC insurance protection up to $500,000 for securities and $1.9 million in cash. Merrill Edge is also regulated by the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). This is one of the few stock trading apps that won’t sell your data to third-party firms. Therefore, users can rest easy knowing that their data isn’t being used for Wall Street profits. For a deep dive, check out our full privacy and security review of Merrill Edge. Want to have a look at Merrill Edge’s website right away? Click the button below.
2. Acorns: The perfect app to help you save and invest
Acorns provides a different approach to investing than some of our other picks and is a very good app for passive investors that want to put their money to work. If you’re a person who has difficulty saving, Acorns has a lot of benefits. Its automated platform saves money for you by default and puts that money to work, so you don’t have to worry about it. It also has a pretty solid cashback program for around 350 retailers. This robo-investing app rounds up your spare change on debit and credit card purchases and invests it bit-by-bit. Since they have a $3 to $5 monthly robo-advising fee, though, you might consider investing a larger amount. Those fees are pretty high if you only want to start with a few hundred dollars. Though this app has only been around since 2012, we’re impressed with its security measures and openness to low balances. Its military-grade, 256-bit encryption, digital safeguards, and bank-level physical security comply with the highest standards.
Useful security features of Acorns
Here are some security features Acorns provides:
Multi-factor authentication: You can verify your identity via a code linked to your phone number, email, or authenticator app. Biometric logins: For mobile logins, users can verify their identities with facial recognition scans or fingerprint scans. Automatic logouts: If you’ve been inactive for a while, Acorns logs you out automatically. Failed logins: Acorns will make you contact customer support to regain access to your account if there have been repeatedly failed attempts to enter your password or biometrics. Account alerts: Acorns will notify you if any suspicious activity is happening on your account.
How Acorns keeps you safe
Acorns uses 256-bit encryption to protect transmitted and stored data. This is one of the highest standards of encryption currently available. Acorns uses both physical and online security protocols to meet the same legal requirements that banks do. Highly-secured servers protect sensitive financial information with bank-level security. With Acorns, your securities are insured for up to $500,000, and up to $250,000 in cash thanks to insurance from the Securities Investor Protection Corporation (SIPC). Acorns is also a member of FINRA and regulated by the SEC. Any reputable brokerage should be insured and regulated by these agencies. Since Acorns is one of the newest brokerages out there, they haven’t had a lot of time to prove themselves. However, they also haven’t had to endure the cybersecurity-driven growing pains of more established brokerages. They’re entering the market with top-of-the-line security protocols and a cybersecurity-centered mindset. If you’d like to learn more about the number 2 in our top 3 best investment apps, read our in-depth Acorns review. Otherwise, you can go directly to Acorn’s website by clicking the button below.
3. E*Trade: A great investment app for beginners and practiced investors
ETrade was founded in 1982 and was one of the first digital trading platforms made available to investors through America Online and Compuserve in the 1990s. In 2020, ETrade was bought by Morgan Stanley, so now it falls under the umbrella of a massive and long-running financial institution. Cybersecurity analysts give ETrade high scores across the board. In 2019, ETrade joined many other online brokerages and began offering $0 commission trading on stocks, ETFs, and stock options. This does mean they engage in payment-for-order-flow, so client data is routed through third-party Wall Street institutions. There are two versions of the app: one for beginners and one for advanced users. Beginners can use the easy-to-use basic app to start trading and take advantage of ETrade’s educational resources and advice. More experienced and active traders and investors can use the advanced version of the app.
Useful security features of E*Trade
Here are some of E*Trade’s security features:
Biometric logins: Face ID or fingerprint scans are available for logins on mobile devices. Hardware token: A Symantec device automatically generates a six-digit code every 60 seconds. To log into your ETrade account, you’ll need the token, the unique code, your user ID, and a password/biometric login. Two-factor authentication (VIP Mobile Access): ETrade has a separate app with unique user IDs and passwords. Once on the app, you’ll get a six-digit access code to log into your investment and trading accounts. Automatic logouts: ETrade automatically logs you out if you haven’t been active for a determined amount of time. Account locked after failed logins: After a certain number of failed login attempts, ETrade will block access to your account. Calling customer support can get you back in. Educational website: E*Trade does an excellent job of informing its customers of the necessary precautions and measures they need to take to protect themselves and their accounts.
How E*Trade keeps you safe
Transmitted data like passwords, biometrics, transactions, and financial and other sensitive personal information is encrypted, coded, and scrambled and can’t be read by third parties. ETrade uses 256-bit encryption, which is military-grade. Parent company Morgan Stanley provides insurance beyond SIPC requirements ($500,000 for securities and $250,000 in cash) with an aggregate limit of $1 billion for losses from unauthorized activity. With no reported data breaches within the past four years and overall excellence in cybersecurity protocol, ETrade is another investment app you can feel comfortable trusting with your investments for the long haul. Want to learn more before making a decision? Read our full E*Trade review to decide for yourself if this platform deserves to be on our best investment apps list. If you’re ready to get started right away, simply head to the website by clicking the button below.
Four Features of Safe Investment Apps
In addition to well-protected websites, servers, and networks, the best investment apps will also take some practical safety precautions for your stock trading. If you’re a beginner and decide to invest and trade without an advisor, you’ll want an app that helps you make good decisions. You’ll also want 24/7 access to customer support in case of an emergency, like if your investment account gets comprised. Here are four things you should look for when choosing an investment app:
1. Insurance protection for securities and cash balances
The best investment apps and web platforms are registered with SEC or FINRA and also have SIPC protection. The minimum coverage is $500,000 for stocks and funds, and $250,000 in cash in the case of hacking or any other unauthorized activity. Most larger firms offer much more than this.
2. Transparency in how they make money
If there are no commissions or trading fees, you’ll want to know how your brokerage is making money. Good apps and platforms clearly state on their website whether they participate in payment-for-order-flow, partake in margin trading, or use cash balances for loans. You’ll also want to dig through privacy statements and make sure that your data is protected. A privacy policy will tell you how much of your activity on the app is shared with third parties.
3. Education and smart decisions
As a beginner, you want an investment app that doesn’t let you jump into the deep end without the right education and options. Inexperienced investors who try to trade on margin (borrowed money) can end up losing a lot more than their initial deposit to try and stay afloat in the case of a price crash and margin calls. Investors that don’t know much about long call options could dig themselves into a hole if they’re not aware of how to do it properly. Before you engage in any trading activity, make sure to do your research and use an app that helps you with this.
4. Good customer support
When it comes to your finances, you’ll want to be able to access real customer support agents in the case of a serious issue or emergency with your investment app. Online investing platforms should have 24/7 customer support hotlines and chats, so you can contact them by phone or messenger. Customer support emails should be replied to promptly.
Are Stock Trading Apps Safe?
It’s estimated that over 150 million users will entrust their trading activity to investing apps like Merrill Edge, Robinhood, and ETrade this year. But there are hundreds of apps on the market. Are these apps safe to use? In 2018, cybersecurity analyst Alexandro Hernandez found software vulnerabilities in 79 out of 100 apps he tested — largely Fintech startups. In 2019, ImmuniWeb analysts found similar issues in 100 Fintech startup apps they tested. Faults included no encryption for storage and transmitting data, which means any unauthorized user could read it after a breach. Some also didn’t perform SSL certificate validation — a measure taken to prevent man-in-the-middle attacks. If cybercriminals steal sensitive data stored on investment platforms, they can commit identity theft or credit card fraud by applying for loans or credit cards in your name. If an unauthorized person gains access to your investment account, they can even clean out life savings, long-term investments, and retirement funds. Any company in the finance industry should have a strict cybersecurity policy. This is why you want a stock trading and investing platform that takes cybersecurity seriously and, preferably, has a long history in the industry. Whether you’re sinking your life savings into investments or setting up retirement accounts, your funds and securities need total protection.
Privacy and payment-for-order flow
When Robinhood burst onto the scene in 2015, it offered never-before-seen $0 commissions and no fees when trading stocks, ETFs, and options. This shakeup for investment apps saw Robinhood surge in popularity among young retail investors. Other online brokerages quickly followed suit to keep up. These days, nearly all investment apps are free to download and offer zero commissions and fees on stock trading. But in recent years, analysts revealed that Robinhood (and most other free stock trading apps, too) makes its money by selling customer data to huge Wall Street firms. This business practice is called “payment for order flow.”
What is payment-for-order-flow?
Under payment-for-order-flow, brokerages send customer orders through third-party companies. They essentially serve as a middleman between the brokerages and exchanges and execute the trades themselves. These third parties pay brokerages and investment apps to fulfill small retail stock trades on their customers’ behalf. This benefits the Wall Street firms, because they actually buy and sell the shares and dictate the price for the customer. Then they’re able to (in a form of arbitration) buy or sell a stock based on the price they gave the retail customer. You might end up paying a penny more than you could have on a trade, while the firm benefits. Activity coming from stock trading apps can also provide insight into retailer buying trends and outstanding options contracts. It’s important to note that this doesn’t mean your funds are not secured. It just means that these third parties determine the price that you’re paying for securities and stocks. This new moneymaker is the main reason why stock trading apps and platforms were able to offer zero commission and no-fee trading. If this is something that bothers you as an investor, you might want to look into using Merrill Edge or Acorns, our top two best investing apps, as E*Trade does engage in this practice.
The Human Element in Cyberattacks
Unfortunately, most occurrences of hacked accounts and transfer of stocks and securities without authorization come from poor security precautions on the user’s part. For example, if someone steals your mobile phone and it’s not protected by passwords or biometrics, the thief could access your financial accounts and transfer assets on your investment app wherever they please. Cybersecurity analysts agree that apps on mobile devices (especially iOS) are safer than accessing stock platforms via Windows and desktop. Plenty of accounts have been hacked when malicious actors and websites inject malware or spyware into devices. The list is long: there are password stealers, keyloggers, and banking Trojans just to start. The surge in ransomware attacks in recent years has proven they usually start with one weak link falling victim to a phishing attack or social engineering ploy. Stock trading apps need the security features listed in this article, but users must also remember to take measures themselves.
Avoid these mistakes when using financial apps
When using stock trading apps, investors often fail to enact important security features or make security errors, such as:
Weak passwords: Hackers can use brute force attacks and password-guessing software to gain access to trading apps. You’ll need a strong, unique password for an investment app. Using the same password across multiple accounts: A data breach on a less secured platform could lead to hackers gaining access to the login or password details you also use on your financial app. A good password manager can help generate strong, unique passwords and manage them across accounts. Failure to use biometric logins: Fingerprint scanning or facial recognition is a much safer way to access financial accounts. Failure to enact two-factor authentication: Login sessions and high-risk transactions are best protected by SMS and email confirmations or authentication apps. Have a look at our full guide on two-factor authentication for more information and make sure this option is activated on your app. Clicking malicious links or visiting dangerous websites: Good antivirus software protects you from info-stealing malware and spyware making its way onto your devices. Not using a VPN: When conducting financial transactions, using a VPN as an extra line of defense will protect your data transfers and sensitive information.
Before you look at any of our top choices, make sure to take the precautions we’ve mentioned above.
Best VPN for Investment Apps
For an extra layer of protection when making financial transactions online, a VPN is a key tool. VPNs offer extra layers of security by changing your IP address and using 256-bit encryption to ensure your safety and privacy online. Though the investment apps mentioned above are safe to use, your connection to the internet may not be. Let’s say that you want to check how your stocks are doing while on public Wi-Fi at the airport. Hackers are notorious for intercepting sensitive data on public Wi-Fi. While they likely couldn’t hack into Acorns, for example, they could glean some data from your activity to try and engage in a (spear) phishing attack or some other cybercriminal act. When it comes to your finances, it’s best to play it safe. A VPN will keep your online activities out of the hands of hackers and other onlookers. For investment apps, we recommend NordVPN. Some websites, including banks and investment apps like Bank of America and Merrill Edge, block access when they detect VPN servers. However, NordVPN offers dedicated IP addresses and obfuscated servers — advanced features that offer a workaround while still providing you with that extra security.
More on Finance and Cybersecurity
Can’t get enough about cybersecurity and finance? Make sure to check out some of our articles on the topic:
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