In recent years, there’s been an influx of micro investing apps. Aimed at new investors, the idea behind these apps is to make investing a little less scary.
After all, investment is a big word and we seem to like things small in the 21st century. Our headphones have gotten so much smaller that Apple’s gone and cut the wires off our earphones.
So is it any wonder investing has gone the same route?
Why Micro Investing?
To answer this question, we first need to step back and take a look at investing in general.
The basic premise behind investment is “work smarter, not harder” by making your money work for you instead of merely working for your money.
When you put money into an investment portfolio, it earns dividends and/or interest (depending on what you invested in).
Even though the market fluctuates (it’s like the cliche: if there aren’t any ups and downs in your life, it means you’re dead), investments are an important form of passive or residual income. It all adds up to help you develop long-term wealth and a healthy retirement.
But the world of investing can be overwhelming for beginners. There are a wide variety of investment vehicles to choose from.
Stocks, bonds, mutual funds, forex, cryptocurrency, ETFs (exchange-traded funds), real estate – the list goes on. It’s difficult enough to choose how to start, but then you need to start thinking about diversification as well!
Until micro investing became a thing, people would traditionally invest through a brokerage. Examples include Charles Schwab, Fidelity, and TD Ameritrade.
But what frightens a lot of newbies about these brokerages is you need a fairly large starting investment. And that’s where micro investing comes in.
What is Micro Investing and What are Micro Investing Apps?
Simply put, micro investing is a way to ease into the world of investments while reducing or even removing many of the traditional barriers.
Think about it. If you’re not already investing, chances are it’s for 1 or more of the 3 most common reasons:
- You don’t think you have enough money to get started because of the big buy-in traditional brokerages require;
- You have no clue how to get started;
- You’re afraid you’ll lose all your money.
But micro investing really does assuage a lot of those fears. It allows you to get started with small amounts of money. In fact, some micro investing apps even refer to it as “spare change investing,” because that’s how they work.
Not only that, but micro investing apps take care of things like choosing an investment vehicle for you. Most start you off with a partial ETF share, which is inherently diversified.
And diversification is a very good thing, as it gives you the chance to continue earning returns on one part of your portfolio when another part is operating at a loss.
How Do Micro Investing Apps Work?
Each micro investing app has its own recipe or approach, but they all follow the same general rule.
- You start off by signing up when you download and install the app;
- The app then gives you the option of setting up an automated investment deposit, which allows you to “set it and forget it” – you simply go about your business and the app will automatically pull an authorized amount of money from your linked account at set intervals;
- As part of the set-up process, you’ll also be asked to provide some basic information that helps the micro investing app determine your risk tolerance and financial goals. Using this data, the app will help you to pick the best possible investment portfolio.
Not so much a step in the process, but definitely a hard-and-fast rule for micro investment apps is their clean, intuitive design.
While brokerage accounts can be as overwhelming as the world of investing is, a micro investment app is easy to navigate and use.
If all of the above doesn’t convince you micro investment apps are the most beginner-friendly introduction to investing, then we’re not sure what will!
Best Micro Investing Apps 2019
As mentioned in the previous section, while all micro investment apps tend to follow the same basic recipe and have a lot of things in common with each other, they also have subtle differences.
These usually start showing after the sign-up process and the way you create your account.
To give you a better understanding of what we mean by that, as well as help you get started with micro investing, we’ve put together a list of the best micro investing apps in 2019.
Stash is one of the best micro investing apps available in 2019.
While it does allow you to set up automatic transfers from your linked bank account, Stash doesn’t automatically invest those funds for you.
Instead, transferred funds are deposited into your Stash cash account. You’ll then have to manually invest those funds, choosing from the available stocks and ETFs that make up your optimized portfolio.
Stash has a few different account plans:
- Beginner – $1/month. Personal investment account, unlimited trades, and financial education resources.
- Growth – $3/month. Personal investment account, retirement account, unlimited trades, and financial education resources.
- Stash+ – $9/month. Personal investment account, retirement account, custodial accounts for up to 2 children, unlimited trades, additional financial education resources, and a metal debit card with 2x automatic Stock-Back rewards.
At the beginning of the year, Stash overhauled their previous model’s version of Auto-Stash and introduced a few new features.
The first of these is Round-Ups. For Round-Ups to work, you need to have a debit card linked to your Stash account.
Every time you make a purchase, the app will automatically round up your transaction to the nearest dollar. For example, if you spend $6.55 at the store, Stash rounds it up to $7 and bookmarks the extra $0.45. Once you Round-Up totals $5, it gets moved into your Stash Invest cash account.
Round-Ups can be turned on or off in your Stash Account settings. The feature only works as long as you have more than $100 in your linked bank account, so you won’t have to worry about it transferring your last pennies.
Another Stash feature is the Set Schedule. Here, you can set up automatic deposits from your linked bank account, including how much you want to transfer, when, and how often.
You’ll also have the option of choosing whether you want Stash to put the money into your cash account or to automatically invest them for you.
Set Schedule, like Round-Ups, can be paused or started via your Stash Account settings.
Finally, there’s also the option of using the Smart Stash feature. Formerly known as Smart-Save, Smart Stash will analyze your spending habits and income to calculate how much you can realistically afford to save.
If you’ve enabled Smart Stash in your Stash Account settings, it will continue to monitor your transactions in the same way Round-Ups does. Smart Stash will then schedule an automatic transfer, just like Set Schedule.
You do need to have a minimum of $5 for transfers, but you can also set up a maximum of $10 or $25.
Acorns is easily one of the best micro investing apps on the market. It’s also one of our favorite options for new investors in 2019.
Like Stash, Acorns allows you to set up automatic transfers from your linked bank account. However, you don’t have to make any manual investment decisions each time a transfer is made.
That’s because when you sign-up as an Acorns user, the app uses the information you provided to recommend a portfolio type. There are 5 to choose from (you aren’t obligated to select the one Acorns recommends, but we would suggest you do):
- Moderately Conservative
- Moderately Aggressive
Acorns also offers 3 different account types:
- Acorns Core – $1/month, or free for college students with a valid .edu email address. The most basic investment account offered by Acorns.
- Acorns Core + Acorns Later – $2/month. In addition to a basic investment account, you’ll also get an Individual Retirement Account (IRA) and a few extra features.
- Acorns Core + Acorns Later + Acorns Spend – $3/month. In addition to your basic investment account and IRA, you’ll also get a checking account and a few extra features.
RELATED: Don’t think you can become a millionaire? Read our guide on How to Make a Million Dollars to find out how easy it actually is!
Acorns touts itself as the first micro investing app ever, so a lot of the features you’ll find in other apps are found here too.
The first of these is, of course, Round-Ups. Every time you use your linked debit or credit card, Acorns will round-up the total to the nearest dollar for you.
This spare change is kept aside for you until it totals $5, after which the funds are transferred to your Acorns account and automatically invested for you. Plus, you can activate the Round-Ups Multiplier to round-up your microtransactions by x2, x3, or x10.
You can also opt for the Recurring Investment, where you set an amount you want to invest every month. This is a true “set it and forget it” feature, as you won’t still have to manually invest the funds once they’ve been transferred: Acorns will automatically do that for you.
Found Money is another unique feature. Acorns has partnered with more than 200 popular brands and outlets, including Apple, Nike, and Hulu.
Every time you spend money there, not only will your purchase get rounded-up, but the brand will give you exclusive cashback rewards in the form of an extra investment.
Spend Strategies will also analyze the way money moves in your linked account – how much is coming in and how much is going out, as well as where.
This feature will then help you identify areas where you can save money, rather than cut off your investment transfers like Stash does.
Finally, you also get access to Grow Magazine, the online Acorns blog where they share their best financial advice and report on current trends.
RELATED: Read our full Acorns Review.
WiseBanyan stands out as one of the best micro investing apps for 2019 because it’s absolutely free to start with. Until you decide you want to make use of the premium features, there are zero monthly or trading fees.
And while other micro investing apps tend to have a minimum investment amount of $5, WiseBanyan allows you to get started with just $1.
WiseBanyan Pricing and Features
Because you can choose which of the premium services to activate (if any), WiseBanyan’s pricing is a little different.
Each premium package also comes with its own set of features. To help keep things short and simple to understand, we’ve put the pricing and basic feature explanations together below:
- Core – Free. Using your provided information, WiseBanyan creates a recommended stock/bonds allocation, which you can use as-is or adjust. You’ll also get access to a set of basic financial and investment tools, including financial advice.
- Tax Protection – 0.24% of your average WiseBanyan account value per year. This premium package uses 3 features (WiseHarvesting, Selective Trading, and IRAutomation) to help you lower your tax bill.
- Fast Money – $2/month or any part thereof. This premium package uses 3 features (Quick Deposit, Auto-Deposit Scheduler, and Overdraft Protection) to help you achieve your financial goals faster.
- Portfolio Plus – $3/month or any part thereof. This premium package allows you to use a Featured Portfolio or design your own Custom Portfolio and add them to your investment milestones to give you more control over where you invest your money.
- Teamwork – cost not advertised. This premium package allows you to share your milestones with a selected Partner, or use the Family Accounts feature (not yet released) to do the same while also adding a custodial investment account for your future children.
What we really like about Stockpile is the fact they let you invest in what’s called fractional shares. How it works is like this: instead of purchasing a full stock and/or ETF share, you buy part of a share.
It may sound like you’re losing out this way, but you’re actually gaining. Sure, you won’t own a full share in any stock or ETF – unless you want to – but you can easily diversify your portfolio for a fraction of the usual cost.
For example, instead of spending $138.52 on a single Disney share, you can buy part of that stock and get others at the same time.
The tricky part about investing with Stockpile is, even though there aren’t any monthly fees, you do pay trading fees. These are inextricably linked with the brokerage (in this case, Stockpile) earning a commission every time you trade.
However, that’s not such a bad thing in this case.
If you’re planning on educating yourself on investments and think you’ll be moving to a traditional brokerage in the future, getting used to trading fees is actually going to be a big plus for you.
And even better, at $0.99/trade, Stockpile’s trading fees are a fraction of those charged by traditional brokerages. For example, Charles Schwab and TD Ameritrade (both of whom we mentioned in our introduction) charge $4.95 and $6.95 per trade, respectively.
Where Stockpile does lose us a little is in their list of additional fees, including failed ACH transfer fines and ACAT outgoing (when you transfer your investment account to another brokerage).
5. Motif Investing
Motif Investing is a micro investing app for new investors with a strict social conscience.
For example, if you’re not comfortable with the idea of investing in gun manufacturers, fast food restaurants, and/or cigarette makers, then Motif Investing is the micro investing app for you.
Trading accounts don’t have any account minimums. However, investing in a motif (a basket of 30 stocks or ETFs that follow a socially conscious theme) does require an account minimum of $300. Impact Accounts also have a minimum balance of $1,000.
This makes Motif Investing a platform that you can grow with, from micro investing up to traditional investing.
Motif Investing Pricing
The pricing structure is a little complicated, unfortunately. Let’s try to make it as simple as possible:
- Next Wave Portfolio – No annual fees
- Motif Thematic Portfolios – 0.50% annual fees
- Motif Impact Portfolios – 0.25%
- Build Your Own Portfolio: Auto Invest Trade – $4.95 trading fee (up to 30 stocks per trade)
- Build Your Own Portfolio: Next Market Open Trade – $9.95 trading fee (up to 30 stocks per trade)
- Build Your Own Portfolio: Real-Time Trade – $19.95 trading fee (up to 30 stocks per trade)
- Next Market Open Trade Stocks or ETFs – Free
- Real-Time Trade Stocks or ETFs – $4.95 trading fee
Motif Investing is also planning on introducing a Cryptocurrency Portfolio and asks interested parties to reserve a spot on their waitlist.
When you start out with Betterment, you’ll only pay 0.25% annually on the basic plan. Also known as the Digital Plan, it lets you start with as little as $1 and gives you access to all of Betterment’s core investment tools.
Once your account reaches $100,000, you can upgrade to the Premium Plan. Here, the annual fees increase to 0.40%, but you also get access to Betterment’s human financial advisors.
Betterment Portfolio Features
When you sign-up, Betterment will curate a selection of portfolios, split between ETFs and bonds, based on your investment goals. They currently offer 4 pre-configured portfolios:
- Safety Net – a conservative portfolio that won’t appreciate in value as fast as an aggressive portfolio would, but it designed to grow faster than the inflation rate.
- Smart Saver/Major Purchase – another somewhat conservative portfolio that offers a high-yield, low-risk approach to investing. This portfolio is 100% bonds and features an automated savings function, which analyzes your spending habits and makes automatic withdrawals from your linked checking account.
- General Investing – a flexible portfolio that starts aggressively and gradually becomes more conservative as you age. The General Investing portfolio is ideal for building long-term wealth, but doesn’t tie you down to a set withdrawal date.
- Retirement – this portfolio, on the other hand, does require a set withdrawal date. Similar to the General Investing portfolio, it starts off aggressively with a high-yield, low- to moderate-risk approach, which tapers off into a more conservative model the closer you get to retirement.
Is Micro Investing Worth It?
Most Millennials know too little about investing. That’s not entirely their fault, though: as we said earlier, investing is a tricky subject.
Micro investing makes things a lot easier, which is definitely a good thing. Most micro investing apps also give you loads of learning resources to help you wrap your head around the investing game.
The thing is, you’re not going to accumulate a lot of wealth anytime soon with micro investing. It doesn’t take Advanced Calculus to understand that small investment deposits = small returns.
But if you’re living paycheck to paycheck and working 2 jobs just to make ends meet, then you don’t have a lot to start with. And the couple hundred dollars micro investing can put back in your pocket is no mean feat.
So is micro investing worth it? Absolutely. Just so long as you remember that even though you’re working with small change, you’re still using real money!
If you’ve got a smartphone, know how to log into your bank account, and have 5 to 10 minutes to spare, then you have no excuse for not getting started with micro investing. It really is that easy!
While you don’t need to know a lot about investing to get started with micro investing, it would help. So here’s another link to our Beginner’s Guide to Investing – just in case.
Have you already gotten started with micro investing? Tell us all about it in the comments below!