Kapitall Review: A Closer Look

Kapitall began operations in 2008, starting out as an investing game that later became an investment brokerage service. The concept is to introduce people to investing with the game and — once they feel comfortable trading with artificial accounts — to move over to the real thing.

It’s an exciting concept that may have a place in the investment brokerage industry. In this Kapitall review, we’ll look at the features and potential issues with the service.

Kapitall Features

You can open a Kapitall account for free through their website. You can start by playing the games, and then move up to the real thing. Once you do, there’s no minimum initial investment, and no required minimum balance. Transaction fees are set reasonably at $7.95 per trade. The site often runs promotions that will allow free trades at certain times.

Kapitall can be an excellent training tool for novice investors, especially the young. It provides an opportunity to “test drive” investing by doing it on paper before venturing into the real thing. You can try out various investment sectors, trading strategies and portfolio mixes without risking real money. And you can work at it for as long as you like until you feel confident about moving onto the real thing, risking real money.

The video game format bridges the gap from game playing to investing in the real world. It can have serious appeal for the video and online game playing crowd. Since it’s mostly young people who participate in these games, it’s a way for them to try their hand at virtual investing and mastering it before doing it for real.

Kapitall can provide a real training tool for novices, but it can also be a testing ground for more seasoned investors to try out strategies through games rather than by committing real money. Finding out in advance that a strategy won’t work can save any investor money.

Potential Issues with Kapitall

The live version of the site offers very limited investment choices, and it doesn’t provide an option for individual retirement accounts. That could be primarily because it’s such a young company — we’ll have to keep on eye on future developments. In the meantime, Kapitall isn’t an option for investors who want the broadest levels of investment diversification or for those who are primarily interested in investing for retirement.

Transaction fees are competitive but a little high for a upstart company. You would expect a new, small investment firm to offer seriously low rates to attract new customers.

Kapitall is not only a new company, but it’s also a very small one. According to their website, they have only 15 employees, some of whom are software engineers, interface designers, game producers, stock traders and technologists. Not only is it s a small staff, but also one that seems conspicuously short of investment professionals.

Thanks to the Internet we’ve all gotten comfortable with upstart companies and concepts that are completely new. Only time will tell if this excitement should also apply to investment brokerages. Kapitall has yet to weather a significant downturn in the financial markets, so it remains to be seen how it will handle the test of time.

The site makes investing a game, and that can be both good and bad. The concept can make investing less complicated, especially to the newcomer. It can give you the ability to experiment without risk and that’s a complete win-win arrangement.

But at the same time, reducing investing to a game — making it fun — may cause investors to under-estimate the seriousness that investing actually requires. For example, the virtual investing game that works so well in rising stock markets could fail miserably in a protracted bear market.

We’ll probably have to wait for the next market downturn to get the full scoop on Kapitall — it only came out in the withering days of the last serious stock market slide. But until then — and maybe even afterward — it can be an excellent place to learn and hone your investing skills.

Is it worth a try? Most definitely! Check out the Kapitall website to see if Kapitall will work for you.

Have you tried Kapitall? What do you think? Leave a comment!

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

All posts by Kevin Mercadante