What is micro-investing?
Have you been working up the courage to start investing? I get you. The words “stock market” sound very advanced and scary and it can take a while to work up the nerve to jump in. I’m a big fan of going back to the basics of Investing, so with that in mind, let’s chat about micro-investing.
Micro investing is when you regularly invest very small amounts of money into the stock market.
Imagine a company as a big pizza, if owning a stock is like having a small slice of the pizza, micro-investing is like nibbling the tiniest corner of the crust.
What are the advantages?
Micro Investing is good for beginners who want to test the water before investing more aggressively. You don’t need a lot of money, you can start really small, as low as $5 on Raiz!
You can also benefit from dollar-cost averaging, which is a “Set and forget” kind of philosophy and means your money could grow over the years and outride any volatility (the extreme highs and lows) or the stock market by buying small amount consistently over a long span of time, rather than investing one big lump sum.
I’m still confused. How does it work?
For example, I use Raiz, a micro-investing app which only needs $5 to start. (This is not an ad for Raiz by the way lol). Raiz has a mix of ETFs (Exchange-traded funds) within the app and it automatically invests my spare change for me!
So when I buy a coffee for $4.50, Raiz will round it up to the next dollar and 50 cents will go into an ETF. I don’t even need to do anything, it’s that simple!
That way, my money is working for me rather than against me.
And I can hopefully watch my investments grow over time.
Well if it’s so good why doesn’t everyone do it?
Well, if you are a more experienced investor and already have a portfolio of diversified stocks elsewhere, micro-investing probably won’t offer anything new for you and you may feel as if you don’t have a lot of investment options and may get better returns elsewhere.
What are some micro-investing platforms examples?
Raiz - Australia
Spaceship - Australia
Robinhood - USA
Acorns - USA
Wombat - UK
Moneybox - UK