Table of Contents

What’s the Best Stock to Buy on Cash App?

The quest for the “best” stock to buy is the Holy Grail of investing, a pursuit fraught with nuance and dependent entirely on individual circumstances. There’s no single, universally “best” stock for everyone. Instead, finding the optimal investment on Cash App, or any brokerage for that matter, requires aligning your choices with your risk tolerance, investment goals, and time horizon.

That being said, for many investors starting out, particularly those using a platform like Cash App with its accessibility and fractional share capabilities, a solid choice would be a broad-market ETF like the Vanguard S&P 500 ETF (VOO) or the iShares Core S&P 500 ETF (IVV). These ETFs provide instant diversification across 500 of the largest U.S. companies, effectively mirroring the performance of the overall stock market. They offer lower risk compared to individual stocks and provide a foundational investment upon which to build a more complex portfolio later. The key is to do your own research before investing any money.

Understanding Cash App Investing

Cash App has democratized investing, making it accessible to a wider audience through its user-friendly interface and fractional share offerings. Before diving into specific stock recommendations, let’s quickly unpack what this means for you as an investor.

Fractional Shares: Accessibility Unleashed

Fractional shares allow you to buy a portion of a single share of a company. If a share of stock costs $1,000, you can invest with as little as $1. This eliminates the barrier of entry for many popular, but often expensive, stocks.

Cash App Limitations

While convenient, Cash App’s investing platform is relatively basic compared to traditional brokerages. It offers limited research tools, no retirement accounts (like IRAs), and fewer order types. It’s an excellent starting point, but as your portfolio grows and your investment knowledge deepens, you might consider diversifying your brokerage accounts.

Building a Foundation: ETFs as a Starting Point

As previously mentioned, Exchange Traded Funds (ETFs) are a fantastic choice for beginner investors. These funds hold a basket of stocks or bonds, providing instant diversification.

Why ETFs?

Diversification: Reduces risk by spreading your investment across multiple companies.
Low Cost: Many ETFs have very low expense ratios, meaning you pay a minimal fee to have the fund managed.
Simplicity: Easier to understand and manage than individual stocks, especially when starting.

Popular ETFs on Cash App

Beyond VOO and IVV, consider these ETFs available on Cash App:

Schwab U.S. Dividend Equity ETF (SCHD): Focuses on high-dividend-yielding U.S. stocks with a history of consistent dividend payouts.
Invesco QQQ Trust (QQQ): Tracks the Nasdaq-100 Index, which is heavily weighted towards technology companies. (Higher risk, higher potential reward).

Exploring Individual Stocks

Once you understand ETFs and feel comfortable with the basics, you might want to explore individual stocks. Here are some considerations when choosing stocks on Cash App.

Investing in What You Know

A good starting point is to invest in companies you understand and whose products or services you use regularly. This makes it easier to follow their performance and understand their business models.

Blue-Chip Stocks for Stability

Blue-chip stocks are shares of well-established, financially sound companies with a history of consistent performance. They are generally considered less risky than smaller, newer companies. Examples include:

Apple (AAPL): A technology giant with a strong brand and loyal customer base.
Microsoft (MSFT): A software and cloud computing leader with a diverse range of products and services.

Growth Stocks for Potential

Growth stocks are shares of companies that are expected to grow at a significantly faster rate than the overall market. They often come with higher risk but also offer the potential for higher returns.

Amazon (AMZN): Dominates the e-commerce and cloud computing markets.
Tesla (TSLA): A leader in electric vehicles and renewable energy.

Disclaimer: Investing in individual stocks carries more risk than investing in ETFs. Always conduct thorough research and understand the company’s financials, business model, and competitive landscape before investing.

The Importance of Research and Due Diligence

Regardless of whether you choose ETFs or individual stocks, research is paramount. Utilize the resources available to you:

Company Financial Statements: Review annual reports (10-K) and quarterly reports (10-Q) to understand a company’s financial performance.
Financial News Websites: Stay informed about market trends and company-specific news.
Analyst Ratings: Consider analyst ratings and price targets, but don’t rely on them solely.

FAQs: Your Cash App Investing Questions Answered

Here are 12 frequently asked questions (FAQs) that will give you a good foundation for investing using the Cash App.

1. Is Cash App Investing Safe?

Cash App Investing is generally safe. Your account is protected by SIPC insurance, which covers up to $500,000 in securities and cash (including a $250,000 limit for cash) should the brokerage firm fail. However, SIPC insurance does not protect against losses due to market fluctuations.

2. What are the Fees Associated with Cash App Investing?

Cash App typically doesn’t charge commissions for buying or selling stocks. However, the SEC and FINRA do charge small fees on stock sales. Be aware of potential fees for certain transactions, and always review the fee schedule on the Cash App website or app.

3. Can I Buy Cryptocurrency on Cash App?

Yes, Cash App allows you to buy and sell Bitcoin (BTC). However, cryptocurrency investing is highly volatile and carries significant risk.

4. How Do I Sell Stocks on Cash App?

Selling stocks on Cash App is straightforward. Simply navigate to the investing section, select the stock you want to sell, and enter the amount (either in dollars or shares) you wish to sell. Review the order before submitting it.

5. Can I Transfer Stocks from Another Brokerage to Cash App?

Currently, Cash App does not support the transfer of stocks from other brokerage accounts.

6. How Does Cash App Handle Dividends?

If you own stocks that pay dividends, Cash App will deposit those dividends directly into your Cash App balance.

7. What are the Tax Implications of Investing on Cash App?

You are responsible for paying taxes on any profits you make from selling stocks on Cash App. Cash App will provide you with the necessary tax forms (e.g., 1099-B) to report your capital gains and losses. Consult a tax professional for personalized advice.

8. Is Cash App Investing Suitable for Long-Term Investing?

While Cash App is a great starting point, its limited features may not be ideal for advanced long-term investing strategies. Consider opening a dedicated brokerage account with more robust tools and account options as your portfolio grows.

9. How Do I Research Stocks on Cash App?

Cash App provides basic company information, including price charts and some financial data. However, for in-depth research, you’ll need to use external resources like financial news websites, company SEC filings, and analyst reports.

10. What are the Risks of Investing in Penny Stocks on Cash App?

Penny stocks (stocks trading for less than $5 per share) are extremely risky and volatile. They are often subject to manipulation and can result in significant losses. Avoid penny stocks unless you have a very high risk tolerance and a thorough understanding of the market.

11. How Do I Set Up Automatic Investments on Cash App?

Cash App allows you to set up recurring investments in specific stocks or ETFs. This is a great way to practice dollar-cost averaging, which involves investing a fixed amount of money at regular intervals, regardless of the stock price.

12. What Should I Do if I Experience Problems with My Cash App Investing Account?

Contact Cash App support directly through the app or their website. Document all communication and keep records of any transactions.

Final Thoughts

Investing on Cash App can be an excellent way to start building wealth, especially with the availability of fractional shares. Remember to focus on long-term investing, diversify your portfolio, and conduct thorough research before investing in any stock or ETF. Choose investments that align with your risk tolerance and financial goals. While no one can guarantee market success, a disciplined and informed approach will significantly increase your chances of achieving your financial objectives.