What is Micro-investing, and How Do You Do it?
Traditionally, investing was a game where high trading fees and minimum balance requirements limited access to those who had BIG amounts of money. Thanks to new technology platforms, micro-investing allows for the saving, depositing, and investing of small sums of money into an investment account.
Rather than holding small sums of money in a savers account, locked out by the high fees of the old-school investing world, micro-investing provides a chance to grow your money. Platforms that offer micro-investing aim to remove barriers to investing, making it more accessible for the everyday person.
Is micro-investing different from normal investing?
The only difference between micro-investing and normal investing is the amount that is typically contributed and the fees that are then charged. Micro-investing allows users to invest as little as £10 to hopefully generate a return.
Some platforms require a small initial deposit, while others allow you to start investing with money rounded off from transactions linked to your bank card. Often you can also regularly deposit money on a weekly or monthly basis.
Positives of micro-investing
It’s easy to start! Some apps are quite versatile and offer investments based on causes or themes you believe in.
They also offer the ability to invest via fractional shares. This is when you can invest any amount of money towards a stock and own a part of share. For example, you can invest £50 in a stock whose single share actually costs £500. This makes investing a lot more accessible. The simplicity and user friendliness of these newer apps can be really useful in taking the first steps in the investment world, teaching the importance of personal finance, saving and budgeting. It can help you test the waters in the investing world and understand which investing strategy you will take to try and build a financial nest egg for your future.
What are the fees?
Most investing apps will have some fees associated with them, but they will typically be much lower than your traditional investing platform. For example, Wombat costs £1 per month plus 0.10% of your account value.
In the long-term, investing small amounts likely won’t provide you with a significant financial return. While it’s a great way to get started, you will likely need to increase your contributions as you get more confident.
Check out the fees of different platforms to make sure that you are getting the right deal for your preferred investment methods, as otherwise the fees can rack up.
Micro-investing with Wombat
We’ve tried to make it as easy as possible to start your investing journey, creating themes to help you choose and providing our learning hub with different tips and lessons. Start investing with as little as £10 today.