How technology is changing the face of investing

The history of investing goes back a long, long way. The principle, however, has always been the same.

By entrusting, or even lending, money to a third party or via an intermediary will cause that money to grow. This can either be by returning an agreed amount of interest on the investment or my increasing the investment itself, for example by investing the money in stocks and shares or even in commodities like gold, silver or even coffee beans.

But one thing that virtually all forms of investing used to have in common was that there was the need to get a go-between of some kind to arrange it. This may have been a bank manager or a stockbroker or any of another wide range of professionals.

One of the key reasons for this is that these people were really the only ones to have access to the sort of information needed to make investment decisions as well as the contacts in the financial world to make those investments.

Of course, there have always been individuals who have been capable of making their own investment decisions, people who have buried themselves in papers like the Financial Times and the Wall Street Journal and can read a balance sheet to judge the investment potential of a particular business or organisation.

But, just as the internet has transformed so many parts of our lives, the same has been true for investing. Now it is easier than ever before to take control of one’s finances and make informed decisions about where and how to invest. Check out this Robinhood app review for further details.

Where to invest

In addition, it is now possible to make a far wider range of investments than ever before with the entry levels for investment being lower than ever too.

Naturally, stocks and shares is the preferred method of investment for many people and there are countless online services like TD Ameritrade that make it simple to put money into a range of things including stocks, bonds, ETFs, mutual funds, futures and foreign currencies.

The ease with which investing of this kind has been made possible has introduced many more people to the possibility of doing something that, previously, may have been well out of their comfort zone. 

The investment in stocks and shares essentially involves making informed decisions on whether they will increase in value. It’s this same psychology that motivates visitors to sites like Virgin Games where there are a number of ways in which players can try to make their money grow.

These range from slots to roulette and from blackjack to poker and, while it may be an unconventional form of investment, it’s also one that can pay off quite well when the right decisions are made and fortune is smiling on the player in question.

 There are always going to be more conservative individuals and for them interest-paying savings accounts are a more attractive option. This is true even though interest rates have been disappointing ever since the global financial crash of 2008/2009 and the ramifications resulting from it.

The rise and rise of internet banking has made opening these accounts easier than ever and the emergence of a new generation of financial organisations like Nutmeg and Metro Bank has brought about a true transformation.

Their whole philosophy has been one that investing should be fully democratised with jargon banished, options clearly explained and a wide enough range of choices available to suit most kinds of investors.

They may be turning their backs on the high-net-worth individuals that have been the traditional target of banks and brokers, but their success suggests that there is a market ready and waiting for their services.

The cryptocurrency phenomenon

If one was looking to a new form of investing that is 100% dependent on technology, then the cryptocurrency boom of the last few years is the very best example that there is. Without technology Bitcoin, Ripple and Ethereum simply wouldn’t exist as entities – but they do and it seems that many people just can’t get enough of them.

When cryptocurrencies first started to become commodities to be traded this was through exchanges that were created exactly for this purpose. The, admittedly volatile, price climbed and fell due to the overwhelming demand that arose for this revolutionary new kind of currency. While it was originally something that was done by relatively few people, as the craze caught on more and more started trading.

Now, some three years on from the original Bitcoin boom which saw its value increase by 2,000% over the 12 months of 2017, a different kind of speculation has emerged in which people can try to guess whether specific cryptocurrencies’ values will fall or rise.

This has been facilitated by a whole new kind of trading site with leaders in the field being eToro and Plus 500. The use of their apps means that trades can be quickly and easily carried out on a speculator’s phone or mobile device.

The use of AI 

Another area in which technology is having a major effect on investment behaviour and advice is in the field of artificial intelligence. The principle way in which it is being used in offering what has become known as “robo-advice”.

As the name suggests, this is an automated service that takes a number of factors into account before an appropriate strategy is suggested. For example, information including the ultimate objective of investing is recorded along with the particular investor’s attitude to risk. This data is then processed to devise an investment plan to follow. 

The advantages of this approach are that it includes far lower fees than other forms of financial advice and it is also based on fact rather than emotion. So, while some investors will always want to have the human touch, this is set to become more and more prevalent for an ever wider range of investors.

In fact, technology in many forms is on the advance with some people even predicting it could be the end of traditional methods forever. Whether this is true or just an exaggeration, only time will tell.