How To Start Small With Micro-Investing

Tuesday 9 March 2021

Here are 3 key concepts, 2 key resources, and 1 key action, to help you understand micro-investing, and get you started investing.

Forget the idea that you don’t have enough money to invest.

Gone are our parents days when you needed $2,000 to get started. Thanks to technology, you can get started with as little as a few dollars and cents.

  1. What is micro-investing?
    Micro-investing is a technological innovation that allows you to invest incredibly small amounts of money. It pools everyone’s tiny amounts of money and invests on behalf of this group in a range of investments. 

    Over time, if you put small amounts of money away regularly, it can grow into something much more sizable (remember the benefits of compounding).
  2. Is it for me? Micro-investing is set-up so that you don’t have to do a lot of thinking. You don’t need to know a lot about the markets to start.

    There are a few key benefits and risks to think about. Here are some of them:

    Benefits:
    > You don’t need to know a lot about investing and markets to get started
    > You can start with a few cents, thanks to round-ups
    > Get broad exposure to the market, across different asset classes and countries
    > Get the confidence to start building an investment portfolio
    > Take the emotion out of investing
    > Micro-investing allows for dollar-cost-averaging

    Risks:
    > Be aware of fees (brokerage, account fees and maintenance fees)
    > If you want market-beating returns, you may need to have additional investments (but, there is nothing wrong with the average market return!)
    > Limited investment options (but to start with, they’re more than adequate)
  3. How does it work?
    Some micro-investing apps take your loose change from everyday transactions, called ’round-ups. For example, spend $4.50 on a coffee, and it’ll round up to $5 and invest the 50c. 

    You can also set-up recurring payments – be it $5 a week, and $50 a month. You can also invest lump sums when it suits you. 

    Whether it’s through round-ups, recurring payments or lump sum deposits (or a combo of all) the platforms pool these funds with all the other investors doing the same thing. 

    It takes that pool of money and generally puts it into share-based investments.
  1. What are my options? There are a few players in the Australian market that offer micro-investing products. Raiz, Spaaceship Voyager and CommSec pocket ar the main ones. Have a look at a comparison of all three.
  2. Understand what you’re investing in. Each platform offers different investment options, from direct ETFs, to constructed portfolios varying from a conservative approach to an aggressive one.

    The good news is these platforms make it very easy to see what you’re investing in. Here is a deeper-dive on micro-investing by Canstar. 

Download a micro-investing app and get started!! The beauty is that you’re not locked into any of them, and it’s so easy to start. 

Give it a trial, start small, and before you know it, you’ll be hooked.


Community Call Out

Get Started Investing – is all about helping beginner investors break down barriers. The best way to work out what those big hurdles are, is to hear it directly from you, the beginner investor.

So, we’re asking for you to share your story with us. It’s really simple – leave your details or a voice message here, so we can get in touch about being on the show. 

We really want to hear from you, so don’t be shy – and remember there’s no such thing as a stupid question. 

Some of our favourite resources and offers to help you during your journey:


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