An ultimate guide to micro-investing

You might be worried about your savings as you are not able to make some. I am here with a solution for you. You might have heard about “micro-investment” or “micro-investing.” Micro investing is the sole solution for your problem.

Here in this article, I am going to discuss everything about micro-investment. You might be wondering what micro-investment is and how it works. Keep calm and read the article thoroughly. Hopefully, I will clear all your doubts.

Through micro-investing, you can easily make your savings and use the money in case of emergency or whenever needed. You don’t need a piggy bank in micro-investment. Modern problems require modern solutions. Just install the app and start your savings.

What is micro investment?

You might have some idea about micro-investing, but let me explain it. Micro investment is like saving your money daily. It doesn’t matter how much you are saving. It can be some dollars or a few cents, but you have to save daily.

Let me give you an example. You bought a coffee for 4.5 dollars. Now, if you are micro-investing, then the app installed on your phone will round it off to 5 dollars. The app will now deduct 5 dollars from your account, out of which 0.5 dollars are your savings.

You might be worried about what is the use of saving 0.5 dollars. Just imagine if you buy two coffees daily, how much can you save in one year? Probably 365 dollars. Now, think about your other purchases and then estimate your net savings. Isn’t it worth it?

Is micro-investing profitable?A coin jar of profits from a micro investment.

Yes, micro-investing is very profitable for those who want to save money but cannot do that. Micro investing helps you invest such a small amount of money that anyone won’t bother. When you invest daily, this tiny amount may convert into a lot of money.

For example, if I request you to give me 50 cents, what would you do? Probably you won’t even think about it before giving 50 cents to me. If you don’t mind giving 50 cents to someone, isn’t it good to add these 50 cents to your savings account?

You might have heard your mom saying, “little drops of water make the mighty ocean.” Micro investing is almost the same. You add a few drops of money to your account, and one day you find an ocean of money. So it’s clear that micro-investing is very much profitable.

What are the pros and cons?

Everything that we buy or come across has a bright and a dark side. It depends on us which side we want to choose, the bright one or the dark one. Similarly, micro-investing has some advantages and also some disadvantages.

Here I am going to explain both the pros and cons of micro-investing. Read this part carefully to prepare yourself for the upcoming hurdles if you are interested in micro-investing.

Pros

A man smiling at his micro investments on his phone and laptop.

The bright side of micro-investing has several points that you cannot ignore. So let’s dive into the details of the advantages of micro-investing.

No advance investment is required

If you are a professional entrepreneur and have some good knowledge about it, you might know about the “advance investment.” Most companies have some requirements, and you have to fulfill these requirements before you start investment there.

The starting rate for most companies is a minimum of 1000 dollars which everyone cannot afford. On the other hand, micro-investing apps require you to submit only 5 dollars as a starting fee. Just miss your coffee for one day or one time and start micro-investing.

Low fees

When it comes to monthly fees that the company requires is about 1.02 percent. It means that if you have one million dollars in your account, you have to pay ten thousand dollars each month.

Now, let’s check the monthly fee of micro-investing websites or apps. If you have less than 5000 dollars in your savings account, you have to pay a fixed price every month. Once your investment exceeds 5000 dollars, you have to pay according to the percentage fee.

Several investment options

Micro Investing apps provide you with multiple investment options. No doubt, the management fee and other fees of the micro-investing apps are lower. Still, they never compromise on the investment options.

Micro investing apps allow you to buy stocks or invest in ETFs. You might be wondering how it is possible to invest such a small amount in ETFs or buy stocks with them. For the convenience of its customers, micro-investing apps allow you to pay for it in “fractions.”

Portfolio management

About 35 percent of the Aussies related to investment don’t know about Investment’s most basic terms and rules. They don’t know about the distribution methods, risk profile, lockup methods, and other investment works. Profile rebalancing is also a rarely known feature.

But you don’t need to worry even if you are not familiar with these terms. Micro Investment apps provide you unlimited support in this regard. They automatically update your profile according to your financial goals.

Simple use

Last but not least, the micro-investing apps are simple to use. Most micro-investing websites have their apps for androids and iPhones. You can check your analytics on your phone through micro-investing apps.

You can daily check your contributions, net invested amount, and savings account growth through micro-investing apps. The apps are beneficial and also teach you some essential tips and tricks about your profile.

Cons

I told you earlier that everything has some advantages and disadvantages. Now I will tell you about the limitations of micro-investment and the problems you might face in your career. Let’s dive into the details to know more about it.

Not suitable for long term goals

It is the only major drawback of micro-investing. If you have long-term financial goals and want to earn more money, micro-investing is not suitable. The reason is that micro-investment involves little money daily.

If you want to earn more money in just a year, you should try any other type of investment. Though you can develop a habit of saving with the help of micro-investing, you are also at risk. You might save a little money in a year or even more.

Limited account options

“Limited account options” is another drawback of micro-investing. If you start investing with micro-investing websites, you have minimal options for your accounts. You can only open an IRA account or a regular taxable account. You have no access to other types of accounts.

Limited diversification

I told you about micro-investment that automatically updates your profile and invests where it thinks is suitable. However, it is an advantage, but sometimes it’s also a drawback. You cannot buy stocks or shares.

Moreover, some micro-investing websites only invest in ETFs, which is profitable only if you don’t need money urgently. We can say that micro-investing apps are only suitable for long-term growth.

Apps and websitesA man holding a phone with an ultimate app for micro investing.

Several websites offer micro-investing in Australia. Here I am going to discuss some of the best micro-investing websites. Read carefully and observe all the websites. Then choose the one that suits you best.

Raiz Invest

Raiz is an Australian website that offers micro-investing. It provides you with six diversified risk portfolios. You can select any of the six risk portfolios according to your financial goals.

If you have less than 15000 dollars, you have to pay a monthly fee of 3.5 dollars only. There are no transaction charges, and no minimum balance is required to start it. Accounts with more than 15000 dollars balance have to pay 0.275 percent of the balance.

Spaceship Voyager

Spaceship Voyager has a mobile application that allows you to check your analytics at any time. You don’t have to pay any fee until your first 5000 dollars investment. After that, you must pay a fee according to their percentage formula.

CommSec Pocket

CommSec Pocket has several rules to follow. First, you must be a customer of CBA so you can make transactions with your CBA bank account. Second, you must invest a minimum of fifty dollars. Third and last, you have to pay an average of 4 percent fee for every trade.

Sharesies

Sharesies is a unique micro-investing application. It doesn’t require you to make a portfolio and invest money. Instead, you have to invest in companies worldwide. If you are from Australia, you don’t need to pay a subscription fee, but you have to pay for every trade.

Conclusion

The above article was about micro-investment and its pros and cons. I also discussed some best micro-investing applications in Australia. Don’t waste your time. Just dive into it and start investing from today.

The pros and cons might help you to decide whether to start micro-investing or not. Meanwhile, the details of different websites will guide you to which website to choose. If you are still confused about anything, let me know in the comment section.