5 Best Micro Investing Apps for Beginner investors

5 Best Micro Investing Apps for Beginner investors

With as little as $5, you can get stock market exposure from micro apps. The apps are designed to be able to provide you with a fun investing experience like providing well-designed interfaces and availing easy-to-interpret descriptions of what is happening and why.

Try to remember about when you last heard the stock market being discussed about on the news. How was the information presented?

Here are some of the things that might have been discussed during the segment:

  • “Hedge funds pull in record profits yet again.”
  • “Stock are [DOWN or UP] on [HOPE or FEARS] of [PLACE EVENT].” For example, “Stocks are down on fear that the infrastructure might be facing an all-time financial bubble.”
  • “This is a 22-year-old who’s made his wealth on [INSERT CRYPTO].”
  • “Hedge funds have an increase in profit for the fifth time in a row.”
  • “Inside the unpredictable world of day-to-day meme stock trading.”

These kinds of stories are what motivate people to invest in the stock market. Since the financial media knows this, they keep using such stories in their segments to keep people glued to their screens. If you’re not familiar with the investing world, these kinds of stories are known to alienate people who are on the outside.

To someone who’s watching the news casually, it may seem as if investing is something that’s done by old rich men or youth with trust funds and have enough cash to burn. Or “geniuses” who spend most of their days in front of computer screens, following how the stock graphs are moving throughout the day.

However, the average investor doesn’t have any of the above characteristics. They are very normal people. They are your neighbors, coworker, or the person sitting next to you at a restaurant.

The average investor doesn’t watch the stock market on a daily basis, and they also aren’t geniuses. They are people who place some of their cash into the stock market whenever possible, then they continue living their daily lives as normal.

The wealth they make gets accumulated over years and decades. This kind of wealth is normally a life-changing occurrence. This is how most investors do it, but you’ll never guess this by watching Fox Business or CNBC.

The Best Micro Investing Apps for Millennials

There are numerous apps that you can use to become a micro investor, but the following are among the best investing platforms available out there.

1. Acorns

Acorns is likely the most popular micro investing app. It’s a well-designed app that almost anyone can learn how to operate. If you’re new to the investing business, Acorn is the best platform to start your journey with since it assumes that you don’t know anything about investing. With a minimum deposit of just $5, you can start making investments with Acorns.

How it works: Acorns recommends a user’s profile based on the answers you give on the questionnaire about financial goals. Instead of individual bond and stocks, the app uses part of low-cost exchange-traded funds (ETFs) to make your portfolio.

You can also sign up for Acorns Personal, at an extra charge where you’ll be able to create an Individual Retirement Account (IRA). In addition, your checking account on Acorns will be synced to all your investment accounts.

Unique features: Acorns allows both manual and automatic deposits, plus you’ll also be able to use a “round-up” setting which rounds all your transactions to the nearest dollar and will then deposit what is left into your investment account.

If you link your credit or debit card to Acorns, you’ll gain access the app’s Found Money partners. The company gives you cash back which is deposited into your investing account for shopping at particular retailers like Expedia and Lyft.

Costs: Here are some of the monthly fees charged by Acorns:

  • Acorns Family: $5/month
  • Acorns Personal: $3/month
  • Acorns Lite: $1/month

Related: Acorns Review

2. Stash

Another micro investing platform that’s suitable for beginner investors is Stash. The company states that at least 84% of their users are first-time investors. You only need $5 to start investing with Stash.

How it works: Stash gives its users a bit more leeway when it comes to making individual investments compared to Acorns. They have a wide selection of EFTs as well as stocks, which provides you more options when setting up a custom portfolio. If you feel overwhelmed by everything, Stash can do everything on your behalf and create your portfolio.

At an extra fee, you can be provided with an IRA thanks to the company’s Growth plan. If you upgrade your account to Stash+, the IRA you’ll get will come with two investing accounts for children as well as a metal debit cards that has cash-back rewards for double-the-stock opportunities.

Unique features: With Stash, you can make automatic deposits, one-time deposits, round up deposits and an additional fourth option: Smart-Stash. This feature stashes away money automatically based on your most resent spending patterns instead of using pre-set times that allocate pre-set amounts.

Stash also provides its users with checking accounts that have debit cards which can be used with all their plans. The debit card enables to receive cash-back in form of stocks after making your day-to-day purchases.

Costs: There are three level of service offered by Stash:

  • Stash+: $9/month
  • Growth: $3/month
  • Beginner: $1/month

Related: Stash Review

3. Betterment

Betterment is one of the first robo advisors to be placed in the investment world. While there’s an app, most of the users opt to use the website.

How it works: When you’re opening an account, you’ll be asked several questions by Betterment regarding the kind of account you want, like a personal investment account or IRAs. The company will also ask you about your risk tolerance and goals. Theis is how they’ll come up with a portfolio of low-cost ETFs and manage it on your behalf.

Your only task will be to provide money for investments. This can be done whenever the customer wants or you can choose to put automatic deposits. There are no investment minimums with Betterment, which means that if you create and account today, you can load money whenever it’s available – even if you only have a few dollars to spare.

Unique features: Although Betterment isn’t a flashy investment platform like most of its micro investing counterparts, it does provide you with a more holistic method of investing. Betterment will handle all your investment transactions. The company also used solid investment techniques like tax-loss harvesting which helps users to save even more funds.

Costs: You’ll be charged a management fee of 0.25% for Betterment’s main investment service. However, you’ll pay a 0.04% fee annually to upgrade your account to their Premium plan so that you’re able to speak to a live CFP when you need advice regarding your non-Betterment accounts like a workplace 401(k). The Premium account requires a minimum balance of $100,000.

Related: Betterment Review

4. Robinhood

The main goal behind Robinhood is to provide individual investors with cheap investing options like those available for big companies. The platform needs a bit knowledge compared to other starter investment companies in the industry. So, if you’ve never invested before, you may want to keep away from this app.

How it works: You’ll be able to buy individual cryptocurrencies, EFTs, stocks and there’s also a no trading fees option. Although the app is a little more bare-bones compared to Stash and Acorns, it also has fewer features.

Robinhood doesn’t have an option that allows the company selects the best investment for customers. You have to do everything by yourself, an this is why it’s more suitable for advanced investors. You’ll be able to purchase fractional shares of EFTs and sticks, which is the most ideal way to begin building your portfolio for higher-priced stocks for companies such as Google or Amazon.

Unique features: Robinhood’s best asset is that the company provides free trades. Usually, trades come attached to hefty fees of $10 or higher, especially if you’re dealing with a couple of the larger brokerage firms. If you’re a frequent trader, using free trades is great way of saving a lot of money.

Costs: Robinhood is a free platform. However, if you’d like to get more trade and investing margins, you’ll be charged $5/month to become a member of Robinhood Gold.

Related: Robinhood Review

5. Stockpile

Purchasing individual stocks can often be pretty expensive. This can be an issue if you don’t have a lot of funds for buying an expensive stock. Even if you did, it would be a bad idea to use up all your money in one investment. Stockpile provides you with a unique solution to this issue through micro investing.

How it works: Stockpile provides users with a simple method for investing: purchasing fractional shares of individual ETFs and stocks. The app doesn’t tell users what they should invest in; the decision is all yours.

Unique features: Stockpiles is great at one thing: providing people with fractional shares for individual bonds and stocks. Meaning that you don’t need to use a large amount of cash to purchase one highly priced stock like Amazon stock. With fractional shares, you’ll be able to purchase portions of different ETFs or stocks at a fairly reduced amount. In fact, with as little as $5, you can start making investments.

Costs: All ETFs and stocks are completely free.

Important Considerations

  • Low deposit requirements. One of the best things about micro investments id that you’ll be able to purchase stock with whatever amount you currently have. This is best way of ensuring that there’s no barrier to entry, but the system also has some disadvantages. Justin Pritchard, the founder of Approach Financial and a CFP said, “I can’t really advise anyone against saving money for future use, but you require a significant amount of money to reach goals such as financial independence, an education fund or other large purchases. I’m more concerned about how people feel like what they’re doing is more than what they can actually do when using these apps.” In translation, micro investing isn’t a bad way to begin your journey, but you shouldn’t just depend on the occasional deposits you make in your investment account as the main way of saving.
  • Performance and fees can impact your investment returns. Most people rely on micro investing apps for investments for funds and stocks which appear to be interesting, fun or progressive. This isn’t a bad thing since it draws people to start investing. This also means that you’re not really selecting investments which will help your money increase with a large margin in the long term. Having a fund is might be an interesting way to invest your money but it can grow poorly or the value can even decline. This is not what you want to happen and it’s not a good outcome for your money. Moreover, most investing platforms require relatively high fees unlike the more traditional options. The fees can consume most of your earnings, which will result to you getting less money with time.

Related: How to Use Your First $100 to Start Investing

Why Millennials Love Micro Investing

Dallen Haws, the founder of Haws Financial Planning and a CFP said, “An increase in micro investing apps such as Stash and Acorns has resulted to millions of millennials to start investing. This is because the apps are easy to use and have somehow become like games.”

Micro investing really syncs with the modern world. Such investment platforms are usually presented in form of apps, meaning you can manage your account on your smartphone. These apps aren’t your grandpa’s ideal platform for making investments.

It doesn’t take much to create an account with a micro investing platform. They can be set up within a couple of minutes and you don’t even need to consult with a representative. Everything is completed via a sleek investment app, and the best pat is that you only need a little money to start investing.

Micro Investing: A Small Portion of a Long-Term Strategy

Thanks to micro investing, making investments has become more accessible especially to first-time investors and people who feel intimidated by the stock market. While its not the best tool, you shouldn’t use it as you complete investing strategy. Ensure that you micro investing plan will result to a greater wealth-building venture.

Use the platforms as a starting board that will help your investing journey to grow. Learn how to invest, then use robo advisors, online brokers or investment advisors to help make your portfolio ideal for your long-term goals.

“Generally, investments apps aren’t bad,” says Haws, “but as usual, how you use the platform will determine how your life will turn out.”

Related: 7 Short-Term Investments for Growing Your Money

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