What Is Micro-investing?
We always seem to be looking for the next investment trend, especially as people who are looking to become smart earners. If that sounds like you, especially if you don't have a chunk of cash to invest, we think you are going to love micro-investing.
What Is Micro-investing?
The gist of the concept allows you to become an investor, even if your pool of savings isn't the largest. It's the compound effect that makes the difference. What would happen if you managed to put away $30 every day for a whole year? Well, you would save $10,950, which would be more than enough to invest. Why wait though, when you can invest these increments as you earn them?
All this is made possible because of fractional shares. Some share prices are well into the thousands for just one, but the ability to purchase a fraction of one allows you to earn based on this share’s performance, which may eventually translate to bigger investments.
Why Is Micro-Investing Popular in Australia?
The accessibility of investment apps helped to make micro-investments a reality in the Australian market. Here’s why the industry is booming:
- Convenience – Whenever you wanted to understand how to invest your money in the past, it seemed like a degree in maths and probably even quantum physics were required. Now, it's a lot simpler, and having apps to help you reinforces that point. Remember their design tends to be intuitive, which means no worrying about the finer details.
- Deposit requirement - By definition, micro-investing does not require the traditional large deposits that you may be used to. Imagine being able to invest with nothing more than a dollar. Some platforms take it a step further, and no deposit is required to get going.
The Round-up System
We thought it would be a great idea for you to understand this concept based on its essential nature. Round-ups form a building block of the micro-investment system. How does it work? Well, imagine that you are spending $14.25 on an investment. The app you're using is going to round up and charge you $15 instead.
Don't be alarmed as you're not going to lose your money. Instead, that $0.75 is going to be tucked away. Once the sum of your round-ups reaches a set interval, that money is then transferred to your investment account.
Naturally, this allows for reinvestment of funds you had no plans for.
How to Get Started with Micro-investing
So, with all the information you've been given, what do you need to do to get started with micro-investing? Well, as you've likely gathered, all you need is the right technology.
We'd advise doing some research to choose an app that makes you comfortable by being attractive and intuitive to use. Some apps have small features and nuances that may be more advantageous to you when compared to others, so it's always important to take it slow and choose wisely.