Investing can be complex. It involves making financial decisions on how your money is going to be invested and managed over time, as well as figuring out the right strategy for each investment.

There are many different types of investments and strategies that you can do to grow your money, but for some people, it can be overwhelming. 

Before making an investment decision, you need to consider several factors, including the amount of risk you’re willing to take on, how much time you have before needing the money in the future, etc.

And like most things, there are ways to make things easier, even in investing.

What is micro-investing?

Micro-investing works by depositing and allocating small amounts of money to be invested in the financial market through funds and fractional stock, which is usually done through a platform or app.

Micro-investing gives individuals the opportunity to grow and diversify their investments without risking a large amount of money. These apps are designed to allow small amounts of savings to be turned into long-term investments by buying a portion of an exchange-traded fund (ETF).

It is a great option for those who don’t have much money and don’t want to keep it in a savings account earning minimal interest rates, for those who don’t know where to start and are totally new to investing, and for those who don’t have the time to monitor and keep track of their investments.

Anyone can do micro-investing! All you have to do is have a debit account and register to any mobile app or platform.

You can treat it as a starting point to learn how to invest, or as a secondary account apart from your existing portfolio. Either way, micro-investing will help you to quickly achieve your financial goals.

How do you do it?

Micro-investing allows individuals to buy stocks or bonds at a minimal price or what they can comfortably afford. To get started, all you have to do is sign up for an account from any micro-investing platform or app and register your debit account to easily fund or withdraw profits from your investments.

You’ll be asked to complete a survey that will determine your risk tolerance and financial goals. This will help you discover which exchange-traded funds (ETFs) fits your needs and decide on where to invest.

Micro-investing platforms are similar to online brokers or Robo-advisers, using advanced software to manage your portfolio. They automate how you invest your money, making it easier to grow and diversify your investments.

You can set up direct debits to your account so that every fortnight or month, an automatic transfer happens from your main bank account into the investment account. This means no more forgetting to pay into it because it’s set as a regular recurring payment!

If, for example, your weekly budget is $100, then micro-investing shouldn’t be more than $5 a week. That way, it won’t affect the rest of your budget and will be easy to save up for.

Micro-investors don’t need to be concerned about day-to-day fluctuations in their portfolios because they are not making significant investments. Instead, they can focus on long-term growth while still having access to the returns that a larger investment would provide.

If you want to get started with micro-investing but don’t know where to start with finding an investment strategy that works for you, talk with a financial adviser who will help guide you through the process of choosing investments based on their knowledge of different markets and sectors within each market (such as resources). 

They will also make sure that any money invested stays safe by making sure there are no fraud risks involved in any transactions made between parties involved in transactions involving stocks or bonds, et cetera.

Some micro-investing platforms will offer reading materials on different investment products, important information on the funds they offer, and guidelines on how to navigate their app for free. This can help you jumpstart your research and make due diligence easy for you.

The pros and cons of micro-investing

Pros

• Micro-investing is affordable: You don’t need a lot of capital to get started, which means you can buy stocks or bonds for as little as $5 to $10 per trade or how much you can currently afford. Their investment returns are better than the interest rates on a savings account, so you can start small and work your way up as you grow your portfolio.
• Micro-investing is easy: There are many platforms that make it simple to invest in small amounts at any time, so you don’t have to be constantly monitoring your investments. You can get started at any time, just have a bank account ready and register to any of the platforms available.
• Micro-investing is accessible and diversified: You can get a little taste of the stock market and learn about investing and how it works. You can also try different strategies without risking too much money. You also have access to a diverse range of stocks since these apps usually invest in exchange-traded funds (ETFs)
• Micro-investing isn’t just for beginners: It can be used by anyone who wants to keep an eye on their investments without having to spend a lot of time researching stocks and other companies’ financial information.

Cons

• Returns in micro-investing may not be seen right away: Because you’re investing small amounts over time, it can take some time before you see any returns on your investment. This is why it’s important to keep track of how much money you’re making so that you know when it might be worth scaling up your investment or putting more into an existing one (if there are any).
• Micro-investing apps charge high fees: While it depends on the app or platform you use, the fees associated with micro-investing are generally higher than those associated with other options, such as mutual funds or exchange-traded funds (ETFs). Some will charge a monthly or annual fee, or the fees will be based on the account balance. Either way, the fees have a tendency to accumulate and you would end up paying more fees than your profits.
• Micro-investing is risky: The stock market can be volatile, so you could lose money fast — even if it seems like a good investment idea when you first put it out there. If your account is small enough, it will likely be subject to fees and/or minimum requirements that make it hard for you to make money back in the long run without making other investments on top of this one.

What are the micro-investing platforms and their fees?

While micro-investing has been around for years, it has only recently become popular due to the rise of online brokerages and apps that allow people with low balances to easily invest their money without paying large fees or minimums on each transaction. 

In addition, there are companies that offer automated services where you set up your account once and then let the service manage your portfolio over time based on an algorithm created by experts in finance who understand how markets work, so you don’t have as much work!

Here are some of the micro-investing platforms to consider that are available in Australia:

Raiz

Previously known as Acorns, Raiz is one of the first micro-investing apps that was launched in Australia. For as low as $5, its users can invest in ready-made portfolios within its platform. 

Raiz is best known for a feature where it rounds up your transactions to the nearest dollar, invests the spare change in your account, and automatically reinvests any dividends you earn from your investments.

In terms of fees, it can vary based on which kind of portfolio you invest in and your account balance. They can charge from 0.28 per cent to 0.34 per cent annually for accounts that have a balance of $15,000 and above. For accounts under $15,000, they charge a monthly fee of $3.50 to $4.50.

Spaceship

Spaceship is an integrated platform that operates as a managed fund where investors can pool their money, invest in a fund, and earn profits and/or dividends based on their fractional share.

It is specifically designed for non-expert investors to get started with and grow their portfolios. They have no minimum investment and a simple pay structure that charges $2.50 monthly as a management fee for users with an account balance of $100 and above.

Commsec Pocket

Commsec Pocket is a micro-investing app from the Commonwealth Bank of Australia (CBA). They offer online and mobile trading solutions aimed at beginners or those who want to invest without having to make a complicated decision on where to invest.

For a minimum investment of $50, you can access its select exchange-traded fund (ETFs) and turn your savings into investments. They charge $2 for every investment transaction, or 0.20 per cent of the trade value if you trade more than $1,000. Its main difference from other online brokers is that it doesn’t charge fees for keeping or managing your account.

First Step

For as low as $1, you can start investing with First Step. It is an investment platform that offers a personalised experience by automatically saving for the goals you have set based on your spending habits. Make investing automatic by creating a saving plan and turning it into a habit for the long run.

First Step does not charge brokerage or upfront fees, but it does charge $1.25 per month for accounts that have a balance under $5,500 or 0.28 per cent per annum for accounts with over $5,500. They also offer the first three months for free to students who may not have a lot to save but have all the time to build their wealth.

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Is micro-investing worth it?

Micro investing is a good introduction to investing and a useful strategy for saving if you don’t have much upfront. If you are a beginner or a newbie to the game that is investing, then micro-investing is definitely worth it. It is a low-cost way to enter the stock market. You can make a significant amount of money through micro-investing rather than keeping your savings and relying on the interest rates in a bank account. 

If you’re already an experienced investor looking to diversify, then micro-investing will definitely still fit in your portfolio if you are after the convenience it offers. However, you might have to manage your expectations in terms of returns.

Micro-investing is better suited for younger Aussies as it can take a long time for them to build their wealth through micro-investing. It is a great way for them to learn about the market and a stepping stone toward bigger investments that they can venture into once they are ready. 

And as most investments go, there will always be risks associated with micro-investing and it is up to the investor if they will outweigh the potential profits that they can earn. ffgdfgfdg