Investing apps use these sneaky tricks to get you to spend more money
They want you spending as much money as possible on their platforms.
Over the last few years, investing apps like Robinhood and eToro have gained popularity by bringing investing to everyday people through smartphone apps. While these apps can certainly be helpful, it’s important to remember that they exist to make money and their users are the main source of that income.
A new video from the YouTube channel Quickonomics has come out with some insight into how these platforms trick their users into spending more money. The video explains how just about every part of these apps’ design is intended to keep users spending more and more money.
Raphael, the mind behind the Quickonomics YouTube channel, starts off by explaining how an investment app’s user interface can coerce users into spending more. Apps use reds and greens to talk about how a particular stock is doing, and these colors trigger a psychological response.
Instead of just a single stock turning red when it’s down, these apps will turn your entire interface red, to make you feel as if you have to do something (spend money).
Additionally, these apps are known for offering free incentives. Investing apps offer things like free stock or free trades when users sign up for an account. Raphael explains how commission-free trading apps draw users in with the idea of free trades, but they ultimately make their money off of users in some other way.
Build software without devs. Blazingly fast. Trusted by 100,000+ teams worldwide. It's so easy, anyone can use it. Start building now.
"Just Write Your Damn Book Already” is a printable guidebook that helps you turn ideas into manuscripts. It’s affordable and perfect for aspiring authors
And then there’s the gamification of these investing apps. A lot of investing apps add various gamified mechanics to their platforms, like leveling up, earning badges, and scoring points. These kinds of mechanics make users feel better about their investing progress and, in turn, incentivize them to keep trading.
Wrapping things up, Raphael goes into the social aspect of some of these apps. Some investing apps are starting to add features that make them look more like social media apps. Users are able to invest based on what others are doing on the platform, creating a sort of hive-mind. This can cause bubbles in stocks and assets as people tend to blindly follow the crowd on these kinds of apps.
Despite all of these methods, Raphael still believes that investing apps can be a great tool for people, and I tend to agree with him.
The main takeaway from all of this is that it’s important to take investing seriously. Even though these apps are easy and fun to use, you are spending real money and it’s important to stay aware of the risks that are involved when you are doing any kind of investing.
- How to delete your Robinhood account
- If you’re on Android, update Microsoft Teams immediately to fix this 911 bug
- This clever read-it-later app actually helps you read all those articles you saved
- How to stop Life360 from selling your location data