How to Get Started With Micro-Investing

Investing

Up until this point, investing was often seen as something that only wealthy people did. And unfortunately, many people used this as an excuse to put off saving for retirement, telling themselves they would do it when they earned more money.

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But if you wait to start investing, you lose out on the benefits of compound interest and shortchange your retirement savings. So it’s best to get started as soon as possible, even if you only have a little bit of money to tuck away every month.

One of the easiest ways to invest is by using a micro investment app. This article will explain what micro-investing is, how it works, and six micro investing apps we recommend trying out.

What is micro-investing?

According to one survey, more than 47% of Americans are not saving for retirement. When pressed about their decision not to invest, over 34% said that they don’t have enough money to invest.

The basic premise behind micro-investing is that you only need a couple of dollars to start investing. When you use a micro-investing app, you invest in very small increments by buying fractional shares.

With a micro-investing app, you can invest as little as $5. And with micro investing you don’t have to know anything about the stock market. The money you save is put in a portfolio of stocks that the company creates for you.

Is micro-investing even worth it?

Micro-investing is not going to get you rich, and it’s not going to help you fund your retirement goals. For that reason, it’s easy to write micro investment apps off as not being worth your time.

But every day you put off investing is one less day that your money can grow in the market. So you can wait until you feel like you have “enough money”, or you can work with what you have today.

Here are just a few benefits of using a micro investing app:

  • Invest with very little money: Micro-investing allows you to invest, even if you only have $5 to spare. So if you can skip your morning latte, then you have enough money to give micro-investing a try.
  • Save it and forget about it: It’s hard to set aside money in a savings account. You know it’s there, and it’s easy to access and spend. With a micro-investing app, it’s easy to save your money and forget about it.
  • Build positive habits over time: Anytime you’re trying to build a new habit, it’s best to start small. Micro investing allows you to ease into investing, and you can start saving more money when you’re ready.

6 Best Micro Investing Apps

By now, you understand what micro investing is, and why it’s worth your time. The next step is to choose a micro-investment app and to invest your spare change. Listed below are six apps we recommend.

1. Acorns

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  • Account minimum
    $0
  • Fees
    $1 per month
  • Best for
    Hands-off investors
    (e.g. College Students)
Overview

If you want a hands-off approach to investing, Acorns is going to be your best bet. After you sign up, you’ll connect your credit card or debit card to Acorns. Every time you make a purchase, Acorn rounds it up to the nearest dollar and deposits that “spare change” into your account.

For instance, if you make a purchase that’s $9.67, Acorns will save the additional 33 cents for you. Once your Acorns account reaches $5, the company will invest the money for you.

2. Robinhood

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  • Account minimum
    $0
  • Fees
    Free
  • Best for
    Margin accounts,
    ETF’s, crypto
    Great for beginners!
Overview

Robinhood aims to make investing accessible to everyone, which is evident in the fact that the company doesn’t charge any commission fees. There’s no charge to open the account, and bank transfers are free as well.

The app is designed for beginners, so there is no confusing terminology, and the interface is easy to use. Unlike other micro investing apps, Robinhood lets you trade full stocks and cryptocurrencies like Bitcoin.

3. Stash

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  • Account minimum
    $5
  • Fees
    $1 per month
  • Best for
    New investors
    or tax-advantaged
    retirement accounts
Overview

Stash is another hands-off micro-investing app designed for beginner investors. After you sign up, Stash will ask you a series of questions to determine your tolerance for investment risks. You will be labeled as a conservative, moderate, or aggressive investor.

One of the things that’s unique about Stash is that you can choose the type of companies you want to invest in. So if there is a particular cause or type of company that you’re interested in, you can set that in your investing preferences.

After you’ve chosen the types of companies you’d like to invest in, you’ll set up your “Auto-Stash.” You choose how much you want to invest and how often.

4. Betterment

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  • Account minimum
    $0
  • Fees
    0.25%
  • Best for
    Low balance investors
    Goal-based investing
Overview

If you’re looking for something a little more hands-on, then Betterment might be a good option for you. Betterment gives you the option to work with a financial advisor who can make investing recommendations.

Betterment offers two different plans, and the most basic plan doesn’t require any upfront balance to get started. Betterment is a great option for anyone that wants an easy investing option while still maintaining a little bit of control over their investment portfolio.

5. Axos Invest (Formerly WiseBanyan)

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  • Account minimum
    $1
  • Fees
    Free
  • Best for
    New investors
    or goal-based investing
Overview

You can get started with Axos Invest (formerly known as WiseBanyan) for just $1. The company doesn’t charge any trading fees for the most basic version. But if you upgrade to one of the premium versions, the company does charge fees.

Axos Invest focuses on goal-based investing, so once you sign up, you’ll be prompted to create your first “Milestone.” You’ll enter how much you want to save and by what date. From there, Axos Invest recommends how much you should save in order to reach your goal.

6. Rize

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  • Account minimum
    $0
  • Fees
    0.25% annually
    on investments
  • Best for
    New investors
    or goal-based investing
Overview

Rize is an iOS app that lets you save or invest your money. If you’re just interested in saving your money, you can pay what you want and set monthly savings goals. The app will automatically take the money out of your bank account every month.

And you’ll earn 1.16% in interest, which is much better than what most savings accounts pay. Rize also offers a number of unique settings, including an “accelerate” feature. This increases your savings by 1% every month.

See also: How to Invest: A Basic Guide to Making Your Money Grow

Final Thoughts

Thanks to micro-investing apps, you can invest your money in the stock market even if you only have $5 to spare. Each of the six micro investment apps reviewed in this article will help you get off to the right start.

Micro-investing won’t help you reach all of your retirement goals, but it’s a good way to start saving if you’re in a tight financial situation. The most important thing is to start investing and increase the small amounts you’re putting away over time.

Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about a variety of personal finance topics including student loans, credit cards, investing, building credit, and more.