Investing, Not Gambling: Apps to Help Young Stock Buyers Think Long Term

Payne Porter and his sister, Piper, jumped on the GameStop GME 1.73% stock frenzy in late January. Mr. Porter, a 23-year-old clothing designer in Los Angeles, invested $5,000, while his 26-year-old sibling, who works at an L.A. marketing agency, put in $3,000, both using the Robinhood trading app.

The wild ride they experienced during the two weeks they owned the stock was both thrilling and terrifying, they said.

“I remember texting my dad when I was up $40,000 and he told me to pull out and I didn’t,” Mr. Porter said. “It was definitely an emotional rollercoaster.”

When they finally quit, they were still ahead by about $10,000 each. It was their first time buying stock on their own, and while they timed their exit well, they said next time they will proceed with more caution.

“It felt more like gambling than investing,” Ms. Porter said.

When Piper Porter bought shares in GameStop, it was the first time she’d ever invested in stock on her own.

Photo: Piper Porter

Young investors have rushed into the stock market, buoyed by the belief that investing should be for everyone. They are lured by easy-to-use trading apps that don’t charge commissions or require minimum deposits, and use emojis, bold graphics and challenges to make the stock market feel more game-like.

Many inexperienced investors made bets on GameStop, most without even the limited success the Porters experienced. Some suffered substantial losses.

Now, financial and education tech companies are trying to teach younger investors how to enter the market more wisely. Their focus is less on gaming the day-to-day ups and downs of stock valuation, and more about strategizing for the long term. Some allow trading but with certain guardrails, such as parental approval or a warning when a portfolio is out of balance.

Here are a few of their apps and services:

Invstr is a trading app that allows wannabe investors to compete with other players for prizes in a “fantasy finance” game, to learn about investing before putting in real money. Students and investment clubs can create their own leagues.

All users—whether they’re playing the game or actually trading from within the app—receive a scorecard on their investment performance, with detailed insights into their risk exposure along with warnings if they’re over-concentrated in a particular sector. People can take a 10-part interactive course on investing developed by Chief Executive Officer Kerim Derhalli, a former JP Morgan investment banker and former head of equity trading at Deutsche Bank.

All content on the app is free for 90 days. There is no charge to open a bank or brokerage account within the app, and no commissions on trades. After three months, people can subscribe to receive premium content for $3.99 a month.

Qooore is a new app designed by two friends in their 30s who were interested in investing but found trading complicated. They figured other young adults must feel the same way, so late last year they launched a service that looks more like a social-media app than an investment app. People can swipe through for stock information, and tap a heart if they like a stock. The app is basic, but it’s intended to provide a fun entree into learning about stocks.

Qooore is designed to look more like a social-media app than an investment app.

Photo: Qooore

“If we want people to be educated, we need to speak with them in a way that’s familiar to them,” said co-founder Igor Sheremet, who works with licensed traders to develop the content, which is currently focused on short-term investing but not on day trading.

He said he is in the process of adding longer-term investment advice to the app. “We don’t want our users to be risky,” he said.

The free app provides basic information on a number of consumer stocks and includes quizzes to test users’ knowledge. People can enter Qooore’s Discord server right from the app, where they can join discussions about stocks. Mr. Sheremet hopes eventually to add in-app trading.

Everfi offers courses on financial literacy aimed at children in grades 4 through 12 to public schools at no charge. (It receives corporate and private funding to cover the costs.) Courses consist of 20-minute videos and online activities in which students can create simulated stock portfolios.

Its Marketplaces curriculum for high schools, which covers the basics of investing, is its most popular—and has seen a surge in demand in the past two months, which the company attributes to news around Robinhood and GameStop.

The Greenlight app recently introduced financial and trading features for teaching children about investing.

Photo: Greenlight

Greenlight is a kids’ allowance and debit-card app that recently launched a financial-education and trading arm. The new feature gives kids access to Morningstar analyst notes and educational videos about investing. Kids can also buy and sell stocks within the app, but only with parental approval. The Greenlight plan that includes investing starts at $7.98 a month.

Greenlight CEO Tim Sheehan said that he wants kids to learn to ask two key questions: Do you think this company is going to do well in the future? When I buy a share of this company, what’s a fair price today?

Benjamin Talks is a website and weekly newsletter that provides parents with tips on how to talk to children about money and investing. The company, created by two women who worked in finance, partners with a nonprofit that provides financial education to urban youth. The company sells actual piggy banks aimed at teaching kids to allocate their pocket change for different purposes: spending, saving and giving. A portion of every bank sold goes to the nonprofit.

The Porter siblings had only heard about GameStop through social media and friends. When their uncle, Brian Dightman, a financial adviser, heard they’d invested in GameStop, he urged their mother to have them sell. They never got his message, but Ms. Porter decided on her own to get out when the stock reached $250 a share. Her brother hoped the shares would keep rising, but when they started to fall again, he sold at $129 a share. GameStop shares closed at $264.48 yesterday.

While they were profiting from their risky bet, the Porter siblings’ younger cousin, Max Dightman, was pulling out of Robinhood. He didn’t invest in GameStop but had bought other stocks, as well as bitcoin, through the app.

Max Dightman lost $10 on a $120 investment in bitcoin on the Robinhood app.

Photo: Max Dightman

“Bitcoin was scary. It goes up and down so rapidly. I felt like it could come crashing down at any moment, so I pulled out,” said Mr. Dightman, a 20-year-old sophomore at the University of Washington, who lost $10 on his $120 bitcoin investment.

Mr. Porter said he put $8,000 of his GameStop profit into a managed account, $1,000 back into GameStop and the other $1,000 into other small company stocks. His sister said she transferred all her gains into a savings account. “I’m waiting to learn more about investing before I buy again,” she said.

Words of Wisdom

Here’s some simple advice parents can share with kids who show an interest in investing.

Trust but verify. Mr. Sheehan, of Greenlight, said it’s fine to learn about stocks through social media, but it’s best to do your own research using credible sources of information, such as reports from financial analysts, newspapers and trusted adults. “You don’t want to confuse gambling with investing,” he said. “Investing means doing your research and making a considered decision.”

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What investment advice have you found most helpful? Join the conversation below.

Develop a system. Rather than putting money into a stock on a whim, financial experts say beginning investors should set aside a certain amount of money each month and continually invest over time. “It’s not about timing the market, it’s about time in the market,” said Steven Gall, vice president of engineering at M1 Finance, an online financial-services company.

Avoid get-rich-quick schemes. “If you get lucky like my niece and nephew, congrats, but don’t expect that to repeat itself time and again,” said Brian Dightman, the investment adviser who is the father of Max and uncle to the Porter siblings. “That’s the exception, not the rule.”

Write to Julie Jargon at julie.jargon@wsj.com

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