What is Micro Investing?

Learn what is micro investing and more.

Updated: May 20, 2024
Matt Crabtree

Written By

Matt Crabtree

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The truth is that a lot of people simply don’t have large sums of money to get started investing. There are plenty of people that want to start dipping into the market, but might only be able to spare a few pounds at a time. There are plenty of new trading apps out there that are actually designed around this. 

Here’s an example. What about the app that ties to your bank card? Then, when you make a purchase, they round up your purchase and invest that minimal amount of change that was needed to round up. Then, there are others that let you invest with £5 and you can add routine small amounts like that if you choose. 

This is what micro investing is all about. Keep reading the guide below to learn what is micro investing and more. 

The Basics of Micro Investing

Micro investing is a pretty specific niche, and yet some companies have really honed in to perfect it. Moneybox is a good example for the UK, but you might also have heard about companies like Acorns or Robinhood that all have similar ideas. 

On these micro investing apps, you can choose from stocks and ETFs that you are interested in and start investing into them without having to purchase a full share.

The broker company holds an inventory of this stock and then pieces it out in fractional shares to their customers. 

So, if you want some Apple shares, but you simply can’t invest enough to buy a full share right now, this is a great way to start getting into the market. As you go on, you can use automated tools and investment options to keep adding small amounts to your portfolio. 

Here’s the neat part. Even if you have plenty of money to invest into whatever you want to, you can still use these tools. It’s a great way to set aside a little something and just routinely invest into portfolio items of your choice. 

While these micro trading platforms are really designed for people who can only invest a little bit here and there, they don’t kick you out or restrict you if you have experience and funds a plenty. 

Where many people might be investing thousands of pounds at a time, you might be able to get into what you want with just a minuscule amount. Something that felt out of your reach is finally accessible to you. 

Pros of Micro Investing

There are always going to be pros and cons with different types or styles of investing. It’s important to know and be aware of those details so you can make an informed choice. Is this right for you? Start by taking a look at the pros. 

  • Make investing more accessible.
  • Requires very minimal money to get started.
  • You can automate and keep adding.
  • You might be able to just round up your spare change.
  • Consistently invest and get to know the markets.

The major benefits of micro investing are the fact that people can get into the market at any level.

Come as you are and start investing. Learn how to invest and play in the stock market. You have the opportunity to build up your portfolio in ways that never used to be an option. 

This also gives you a valuable time to learn more about the market and make plans for your portfolio as it continues to grow. The fees in these apps are typically lower than a traditional trading commission fee might be. However, they are structured differently so you’re going to pay fees in different ways. 

Cons of Micro Investing

Micro investing won’t be the right fit for everyone. There are cons to using this type of app. It’s up to you to determine whether the pros outweigh the cons in your situation. Take a look at these cons. 

  • Your returns won’t be as high.
  • The low fees are going to hurt unless you are regularly contributing.
  • Your choices might be more limited.
  • You will eventually need to contribute on a larger scale to meet goals.

While micro investing is a great choice, it’s going to build up slowly.

If you’re wanting to fund retirement you may not get there just from micro investing alone. However, if you simply don’t have much to put in, it’s still a great start and better than doing nothing. 

In most cases, the fees are low and you’re likely just going to pay a monthly fee instead of big commissions or trading fees. As long as you are adding consistently, this won’t be a big deal. But if you get to the point you aren’t adding in much, it can quickly eat away at your investments. 

Final Thoughts

Micro investing is a great choice if you’re just getting started or you simply don’t have a lot of funds to invest with. Companies that specialize in this capacity have gone to great lengths to provide a reliable and valuable option for someone who needs it. 

Just be sure to check out all the details and understand the fee structure before you commit to a company. 

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