Everyone hears about getting rich on the stock market or building a nest egg over time, but some retail investors (that is, everyday people) take a look at stock prices and decide that Wall Street is too expensive to get involved. If only they knew about micro investing…
6 Best Micro Investing Apps
It’s easy to see why a potential stock market investor gives up when they take a look at the price of Amazon stock ($3,200 at the time of this article), Tesla stock ($570), Google Stock ($2,300) or even something less expensive like IBM ($145). If an investor only has $100 a month to invest toward their financial independence, they couldn’t even purchase one share of IBM. They could, of course, research the best stocks to buy under $5 and buy a number of them, but low-priced stocks to belong to younger companies with potentially volatile prices. So, what is an aspiring investor to do?
One option is to send a portion of their paycheck to a company sponsored 401(k), or arrange to have it sent to a Roth IRA. In most cases, retail investors can get away with allocating just $25 or $50 per month to participate in a mutual fund or ETF rich portfolio managed by a financial advisor. Then again, what if a retail investor has done a little learning about buying and selling stocks or buying and holding stocks for dividends, and they want to try to build their own investment portfolio? That’s where micro-investing comes into play.
Let’s face it, the cost of a four-year education has skyrocketed over the last several years, while salaries have largely remained stagnant. Many millennials are living at home with their parents to save money for other life pursuits. That leaves little cash to invest in retirement.
Wouldn’t it be nice to have a six-figure brokerage account with your name on it? It doesn’t have to be a pipedream. Oftentimes, all that’s required is dedication and consistency. You only have to consistently invest a few dollars here and there, and that’s where micro investing apps can help.
What is Micro Investing?
Micro investing involves saving small amounts of money to invest. These days it is almost always facilitated by an app. Micro investing platforms remove many barriers to investing, usually by minimizing fees and lowering the cost of investments.
For example, some apps allow investors to create an account on their phone and purchase fractional shares of stock with no trading fees. If an investor only has $300 to invest, certain kinds of micro investing apps would let them invest that in Amazon stock, purchasing 10 percent of an Amazon share.
Can You Make Money Micro Investing?
Absolutely! Most micro investors are amazed at how much they can make. If you were to put all your spare change into an account (or round off debit card purchases to be put in a digital piggy bank) you’d be amazed by the amount that accumulates from savings alone. Unfortunately, inflation causes money to lose value over time, but fortunately there is a better way to put those nickels and dimes to work: investing them. When the money deposited in your digital piggy bank is invested, you’ll be amazed how it can quickly snowball into some serious funds.
That’s why the best micro investing app is not a mere savings account. It’s an investment account that can help a new investor reach their financial goals quicker than they expect. One of the most effective methods involves rounding off each credit card purchase to the nearest dollar and depositing it into a diversified portfolio of mutual funds. Beginner investors don’t even have to worry about how they will grow these small sums into a sizable account balance because the investment app automatically does it for them—all for what is very often an extremely low monthly fee.
Some micro investing platforms do not charge monthly fees. Instead, they price their securities more than the price would normally be for an investment account or brokerage account at a larger, more traditional financial institution. While it’s never a bad idea to shop around to compare stock prices and fees, the difference doesn’t really come into play with the volumes retail investors typically trade at.
How to Start Micro Investing
It’s really as simple as downloading one of the apps below. Typically, you will need to provide some personal information, just as you would when opening a checking account. This will probably include your name, address, Social Security number, etc.
Always do your research and make sure you are using a legitimate application. A good way to know if it is safe is by looking at the number of reviews it has on the app store. Thousands of positive reviews indicate that an app is real and secure. Few reviews or lots of negative reviews could indicate that the app is fraudulent, and may be used to fish for personal info from those who want to invest in cryptocurrency or buy and sell stocks.
Once you download an app, you’ll need to link a bank account. This process is usually very simple because most of the apps are already integrated with major banks, or they can easily integrate using a third party like Plaid.
If you’re new to investing, consider an Infinity Investing membership! Our experts provide the strategies, tools, and resources you need to start growing your money today!
Best Micro Investing Apps
If you’re looking to start micro investing today, our experts recommend looking into one (or more) of the micro investing apps below:
Acorns links to your bank account, and rounds off the change from every purchase—depositing it into a brokerage account managed by a robo advisor. You don’t have to pick and choose stocks or understand the difference between trading vs investing. You just need to pick how conservative or aggressive you want your investment strategy to be.
Conservative investments usually include things like government bonds, which are not very volatile, but have a low rate of return. Aggressive investments would be assets like stocks, which are more volatile, but over time yield significantly higher returns. Acorns charges a low $1 management fee per month, but the service you get in return is truly amazing.
Stash is similar to Acorns. Its name references the idea of stashing away money. In addition to its guided investments, Stash is also a banking service with checking and savings accounts that plug into dashboards, providing investing advice to help users meet life goals.
Stash also offers a stock back debit card, which rewards users with investments for their purchases. The card has no fees to use, and it’s a great way to leverage everyday purchases towards a growing account balance for your investment account. It’s very similar to the roundup feature of Acorns.
Robinhood was a hero who stole from the rich and gave to the poor, and that’s what the Robinhood aims to do…sort of.
Robinhood charges no trading fees for investing in stocks or crypto, and the platform allows users to buy fractional shares. If a stock would normally be too expensive, you can put whatever dollar amount you can afford toward that stock. You can place trades right from the app, and they are executed fairly quickly.
To give a real-world example of the fractional micro investing offered by Robinhood—imagine you only had $10 to invest and wanted to purchase a share of IBM, Robinhood would let you purchase $10 worth of IBM stock (as opposed to paying upwards of $100 for one share at a time). There is no minimum investment to get started on Robinhood.
Wealthsimple is another micro investing platform, and as its name implies, the goal is to make wealth building simple. Users pick an investment strategy that aligns with their current life goals, but the investing itself is done by a robo-advisor—this means users will not have the do-it-yourself experience of Robinhood. That said, wealthsimple is also perfect for socially conscious micro investing, as they attempt to build a diversified portfolio in companies that exhibit environmental and social impact.
Not all types of investing in a given company involve the stock market. Microventures brings the world of startup investing to everyday people by combining crowdfunding with venture capital.
Users can browse startup companies looking for investors and purchase into companies they believe will make it big. Usually, the ultimate goal of buying into such a company would be for the company to go public on the stock market, with the initial investment translating into stock ownership down the line. While startup venture capital investing is usually cost prohibitive for most, Microventures makes it possible for the average investor to invest in interesting startups. It’s important to note that many of the investment opportunities on their investing platform do have a minimum investment requirement, though in some cases it might be as low as $100.
Fundrise brings the world of real estate investing to everyday people looking for a micro investment. Real estate investing can also be cost prohibitive for most because getting into real estate usually costs hundreds of thousands of dollars. Fundrise, however, is a REIT (Real Estate Investment Trust), which allows individual investors to purchase a fractional share of a real estate investment.
In the case of Fundrise, for as little as $500 you will get a share of a diversified portfolio of rental properties that are consistently growing and generating dividends from rental income—generally around eight percent, which is not a bad return. As mentioned, there is a minimum investment for participation, but among online REITs, Fundrise is actually one of the more affordable options. It’s a great micro investment option for micro investors who want to diversify their portfolio away from individual stocks, mutual funds, or a robo-advisor guided account.
How is Micro Investing Different from Regular Investing?
They are not really different, per say. Micro investing just means investing a smaller amount of money at a time. And, as mentioned, micro investing is usually facilitated by a software or smartphone application that links to your bank account.
In some cases it’s automated, and in others investors have to play an active role. No matter which type of app you choose, micro investing gives retail investors the chance invest a small amount of money into the stock market or the crypto market. The fractional investing component has also given individual investors the chance to participate in other asset classes, like startup companies, real estate, and even works of art and collectibles.
Micro Investing Has Brought Financial Opportunities to the Masses
The plethora of micro investing apps on the market have all but taken away the excuse of any potential investor who says they don’t have enough time, money, or know-how to start investing. Getting started is as easy as downloading an app, and with the round-up features many of the apps have, it can be relatively painless to add to the budget.
Micro investing is only the first step toward taking an active role in your financial future. The next step is to research the best investment strategies to build a future nest egg. By joining Infinity Investing, you’ll gain access to numerous investment tools and information, including our monthly livestream investing workshop.
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