An app-etite for trading

Q:

Some friends have started trading stocks with a popular app. Is there any downside to that, or should I join them? — A.M., Portland, Ore.

A:

You can join them, but do so with your eyes open: There are both upsides and downsides to services that streamline investing in the stock market. For starters, when there’s little to no cost to start trading, many people start without learning much about stock investing and how to do it well. Many don’t understand that trading frequently is a bad idea, as it fails to give good companies time to perform, and leaves investors with costly short-term gains (taxed at higher rates than long-term gains). Trading with borrowed money (”on margin”) is another ill-advised idea, especially for beginners, yet some services make that easy.

Investing in stocks can definitely be fun and exciting, but be wary when an investing platform makes it like a game, showing you your “performance” like a score. Those are your hard-earned dollars that are growing — or evaporating. All new investors should be taking the time to research the companies they invest in, instead of just buying what’s popular and hoping for the best. Many new investors have been jumping into “hot” stocks that have been soaring, hoping to see their own holdings soar, too. But few stocks keep growing that rapidly. Plenty will retreat a little or a lot — and may burn many naive investors.

Q:

If I donate $100 to charity and my company matches that with another $100, can I claim a $200 deduction on my tax return? — P.H., Parchment, Mich.

A:

Nope. You can deduct only what you contributed.