What Is Micro-Investing? - The Answers To All Your Questions (2024)

What is micro-investing, and can it work for you?

Frankly, the stock market can be overwhelming for some people. If words like diversification and asset allocation, investment portfolio, exchange-traded funds, and taxable brokerage account make your head spin, you might assume that investing in the stock market is simply not for you.

But that’s not the case. Enter – micro-investing.

Micro-investing is a way to help you put your extra money to good use. Rather than letting small sums sit in a savings account, where inflation will likely get the best of you, you can take advantage of micro-investing strategies.

Micro-investing is an inexpensive way to get involved in investing without as much risk or money. You can invest with a small balance – as little as a dollar, in some cases! – to help you build up your savings and move on to larger investments over time.

In this post, we’ll tell you all about micro-investing work – so you can turn a few dollars into a hundred in no time.

What is a Micro-Investment?

Micro-investing is a term that is meant to describe the process of depositing, saving, and then investing small sums of money into an account. These smaller sums may not seem like much at first, but over time, they can grow into a larger balance.

That’s because micro-investing allows you to get a better rate of return on your money than you might in a traditional, low-interest savings account.

Micro-investing platforms remove many of the barriers to traditional investing, such as account minimum balance requirements and high fees.

There are even micro-investing apps you can use to simplify the stock market and make it easy for you to mindlessly invest your money on the go! Some of these simply round off your purchase to the nearest dollar when you buy coffee or groceries at the local bodega, making it easy for you to invest your spare change toward a brighter future.

Micro-investing isn’t any different than regular investing except for the fact that it allows you to maximize the growth potential of your money while giving your savings a shot at actually beating inflation. It is more accessible than most typical investing account options, too.

Since most micro-investing platforms charge zero fees or minimal fees, plus they allow you to invest small amounts of money, many of the barriers related to investing are removed.

The goal of micro-investing is that it can help you ease your way into investing markets – or to help you reach your smaller financial goals. You probably won’t retire off what you earn through micro-investing, but it can help you patch together enough money in the meantime without having to open up a high-minimum investment account.

What Are the Benefits of Micro-Investing?

Micro-investing poses lots of benefits – some of them more obvious than others.

For one, this kind of investing is a great way to start saving money if you are a beginner. It can allow you to learn more about the stock market and to do so in a low-risk way.

For many people, especially millennials, the stock market is daunting. Using a micro-investing app to dip your toe in the water is a great way to alleviate your fears related to investing so that you can try out bigger, riskier pursuits later on.

Plus, by making regular investments, something known as dollar-cost averaging, you can lower the average amount of investment you spend per share and reduce your risk.

Majob Benefits of Micro-Investing

• You can start earning interest immediately
• Your portfolio can be diversified
• Investments can be automatic
• You can invest small sums of money with minimum (or zero) trading fees and often, no minimum balance
• There is maximum flexibility in how you choose to invest your money

How Do You Get Started With Micro-Investing?

Many people use micro-investing apps for their flexibility, since they don’t require a lot of in-depth knowledge of the financial world or paid investment advice.

However, if you’d rather not take your micro-investing on a digital journey, you can always buy fractional shares of ETFs and stocks. This can be done in the traditional sense but also through an app (Stash is one such app). Many brokers will allow you to invest small amounts in companies like Microsoft, too, letting you start investing without putting a ton of money into it.

If you decide to give micro-investing a try, it’s a good idea to put small investments across a diverse set of funds and stocks so that you can have a diverse portfolio that withstands market fluctuations with ease.

One note of caution – be wary of fees. Most micro-investing apps do have fees associated with them. The good news is that these fees tend to be relatively low, but they do still exist. The more money you plan on investing, of course, the higher the fees will be.

Remember, micro-investing isn’t a long-term financial planning strategy. It’s just a way to invest small amounts of money for now. You can always use the money you mean in your micro-investing efforts to boost your other investment and retirement accounts, but you shouldn’t plan on using the money you earn from micro-investing to fund your retirement!

Top Micro-Investing Apps

While you can get started with micro-investing by buying fractional shares and exchange-traded funds, one of the easiest ways to get started is by using a micro-investing app.

Webull

First on our list of micro-investing programs is Webull. With Webull, you’ll enjoy online stock trading with zero commissions.

It’s great for someone who wants to actually learn about investing, since you’ll be able to access full extended hours trading and real-time marketing quotes. It’s not fully automated, so you can start to dip your toe into the wide world of the stock market on your own!

Click Here To Get Started

Acorns

Without a doubt, Acorns is one of the most popular micro-investing apps out there. After all, it was one of the first.

When you open an Acorns investment account, you’ll just need to download the app and answer a few questions about your risk tolerance and investing goals. The app will create a portfolio based on your needs. Then, you link your debit card and get started.

Every time you use your card, the app will automatically invest the spare change, rounding up to the next dollar.

You can also benefit from a feature named Found Money, where you’ll get rewards for shopping with partner companies.

It costs just $3 per month!

Click Here To Get Started

Stash

If you want to “stash” your cash with minimal risk, go with the Stash investing app. You can invest as little as $5, setting the app to withdraw a specific amount of cash from your bank account every week so you grow your investments over time.

With Stash, you’ll be able to choose from more than 150 stocks and ETFs – with minimal industry jargon involved.

Click Here To Get Started

Rize

Rize is another micro-investing platform to consider. This savings and investment app is a flexible pay-what-you-want app that will let you get your savings back on track, diverting part of your paycheck to a separate savings account.

To get started, all you need to do is set a goal and deadline. It could be a short-term goal or a long-term one – Rize will invest the money for you to help you maximize your returns.

Click Here To Get Started

Robinhood

Robinhood is another low-cost investment app. It’s super popular with millennials and young traders and while it’s not solely focused on micro-investing, it is a great app for people who want to get started with investing but don’t have tons of money to do so.

It’s better for advanced investors than total newbies but will allow you to choose which investments to buy and when. You can invest in bonds, stocks, ETFs, or even options and cryptocurrencies. You’ll be buying fractional shares, making it a good choice for people who have smaller balances to invest.

Get A Free Stock When You Open A Robinhood Account

Public

This is another opportunity to micro-invest – but it’s great for those of us who are addicted to social media!

Like social media, Public allows you to share – except this time, you’ll be sharing your investing experience with your friends and family!

You can participate in investing themes to build your portfolio and you will have the option to buy fractional shares – you don’t have to buy an entire share at once, meaning you can build your portfolio and minimize your risk over time.

Click Here To Get Started

WiseBanyan

Last but not least is WiseBanyan, offered by Axis Bank.

With as little as $1, you can get started on your investing journey. The app charges no trading fees or monthly fees, letting you get all the financial support you need while laminating the usual hassle related to management and trading fees.

Click Here To Get Started

Can You Make Money Micro-Investing?

There are very few downsides associated with micro-investing. However, it’s important to note that while you can make a little bit of extra money with the apps mentioned above, it’s not a long-term investment strategy for people who are serious about where they put their money.

If you want to see a larger return, it’s a good idea to make larger contributions in larger accounts. You can’t withdraw your money immediately, either.

Plus, you’ll see minimal returns and there’s a lack of control over where your money goes.

This is true of many other types of investment accounts, too, but if you want to exercise complete control over where all that spare change goes, you’ll want to set up an online trading account or go to a brokerage firm.

That said, there are so many benefits of micro-investing that it makes sense for most people to sign up for one of these apps and start investing.

Of course, getting qualified investment advice from a financial planner is a great way to know for sure whether micro-investing is right for you – with such little risk involved, why not get started today?