Let’s get straight to business: yes, micro-investing is a real thing that allows people all over the world generate an additional income with no efforts.
The doubts are spread by those who tried micro-investing apps without a clear understanding of their goals and rules of portfolio management. Being too greedy and therefore picking too risky assets to invest in people had their money wiped out in a couple of days to leave micro-investing with unfair disappointment.
The thing is you should treat micro-investing exactly in the same way you would do if you were in a real “big investment” game. Micro-investing obeys the same laws and rules and it inherits the risks of full-size stocks, bonds, commodities and other securities.
No, you won’t become rich but it can bring you good money
The concept of micro-investing is perfect for two main reasons. The first one is plain and obvious – it offers you an easy way to earn some extra bucks spending as little as your spare change. You don’t feel any harm to your monthly budget while the micro-investing app collects the money day by day and makes investments. The second great reason we should thank the inventors of micro-investing platforms that it teaches a user how to make investment decisions, it gives an understanding of investment vehicles price correlation with the market behavior and the state of the economy.
With the average investment of about 40$ a month in a portfolio with a moderate strategy (that consist of high-risk and low-risk ETF’s in almost equal proportion) you can earn about 40-50 dollars above the invested bucks. Everything that is above could be earned through more aggressive and risky deals, but if you are ready to lose some dollars for the sake of trying to get the most of your micro-investing app, choose ETFs with startups stocks. The price of it is highly volatile, so by buying these stocks chances are you will double your money if the proper influential market data or information about merging or acquisition arrives.
How to take the most from micro-investing?
Now let’s talk how to maximize the potential profit without increasing the sum of investments. The answer is obvious – change the strategy and accept higher risks. Basically, it’s the fundamental principle of the whole financial world: if one wants to earn bigger money they have to take the higher risk.
Safe investments bring near to zero income, while risk pays off (or wipes out your entire money).
So, to take the most of your investments through the app you can opt for:
- high-risk ETF’s comprised of startups stocks mainly;
- shifting your daily limit of spare change collection to increase the number of investments made;
- reinvest the profit regularly without withdrawing money during the long period of time;
- risks hedging through using another investment account with the different set of vehicles to compensate a too high risks on the main account.
TOP-5 apps for micro-investing
This is the leading app, according to the official statistics of the number of users. The simplicity of the app makes it attractive for teenagers, students and everyone who is not ready yet to go into big money investment. The app rounds up every purchase made with the bank card and automatically invest your spare bucks in certain instruments (shares, represented by Exchange Traded Funds).
Stash offers a great variety of investment vehicles so you can choose shares from more than 30 ETFs.
The app is pretty unique in terms of its concept: unlike other platforms where users’ money is being invested automatically, Stash directs you and makes investment recommendations, based on your risk tolerance and financial goals. You can consider Stash as an excellent practical “launch pad” before joining the world of full-size investment with real risks.
It’s a great app for beginners who are not willing to pay any fees. The user receives a wide range of ETFs that are comprised by mainly American companies’ stocks. Robinhood is the only platform that provides users with the separate taxable account. That solves a problem of many micro-investing apps users as half of them simply are not aware that the profit taken from online micro-investments is taxable, while the other half is just trying to escape taxes through reinvesting the money within the same app.
Betterment is the app that users consider a “step 2” after a simpler platforms like Acorns and Stash. Betterment offers three packages (types of account), where “Betterment Premium” package requires a minimum amount of $250.000. User gets an access to a breathtaking variety of investment vehicles, and the only con of Betterment is that it charges $0.25 fee for each deal.
Wealth app takes micro-investing to the whole new level by offering its users an outstanding choice of vehicles. Basically, it is almost a full-scale investment platform with 11 types of assets, including American stocks, treasuries, Real Estate and many other securities. You need to have at least $500 in order to open an account within the Wealthfront. There are no fees for maintenance.
Where else can you invest with as little as several dollars?
Crowdfunding is one of the most popular ways to make investments with little money. Online resources for crowdfunding invite potential investors by offering them different projects that need financing. People may choose from thousands of projects whether from art or technology spheres, so that system attracts millions of business founders (from one side) and investors (from the other side).
Currently, the most popular and large crowdfunding platform is Kickstarter.
Lending club is an online service that connects individuals who seek for cheaper loans and potential lenders who are willing to give their money in a form of loans. One doesn’t need to have thousands of dollars in order to find borrowers. This system works as a mutual club where lenders with whatever little money put dollars into the common lending pool of funds and later share the payments from borrowers in accordance with the initial amount. Anyone may join lending club having as little money as $5.
Those are the stocks with an extremely affordable price. Normally, all penny stocks cost no more than 5 dollars and are traded out of main stock exchanges. The price is so low because due to certain reasons investors don’t find these stocks worthy. People buy that at a low price in hopes one day the price will jump and they’ll get the jackpot.