Micro Investing 101: A Complete Guide for Beginners

Written By
Julija A.
Updated
December 31,2024

Micro-investing is a new and popular way to invest your money. Unlike traditional investing, which involves putting your money into large stocks or mutual funds, micro-investing allows you to put small amounts of money into individual companies.

For example, instead of investing $1,000 in a mutual fund, you could invest $10 in 10 different companies. Micro-investing is a great way to diversify your portfolio and reduce your risk. And because you're only investing small amounts of money, it's a fantastic way to get started in the world of investing.

When you open a micro-investing account, you'll be asked to choose which companies you want to invest in. You can then set up automatic investments in those companies, or you can make manual investments whenever you want.

Your account will be managed by an algorithm that will rebalance your portfolio and reinvest your dividends. And that's all there is to it, really. Micro-investing is a simple and easy way to start building your investment portfolio.

The Advantages of Micro-Investing

Micro-investing has many advantages, especially when compared to traditional investing methods. 

For starters, it is much easier to get started with micro-investing than it is to invest in stocks or mutual funds. All you need is a phone and an internet connection. There are no minimum investment requirements, so you can start with as little as you want. 

Additionally, micro-investing allows you to invest in a wide variety of companies and industries, allowing you to diversify your portfolio and reduce risk. 

One of the best things about micro-investing is that it is designed to be convenient and affordable. You can make regular investments through payroll deductions or automatic transfers from your bank account. 

And because there are no transaction fees, you can keep more of your money working for you. With all of these advantages, it's no wonder that micro-investing is becoming more popular every day.

The Disadvantages of Micro-Investing

One of the main disadvantages is that micro investors often have little control over where their money is invested. For example, many investing platforms allow users to invest in pre-selected portfolios, which may not align with the investor's goals or risk tolerance. 

Also, micro-investing can be challenging for beginners who are not used to managing their finances regularly.

Micro-Investment Platforms

Micro-investment platforms allow users to invest small amounts of money into various investments. These can include stocks, bonds, ETFs, and even cryptocurrency. 

In most cases, users can set up automated investing plans so that their money is automatically invested on a regular basis. This makes micro-investing extremely convenient for busy people who don't have much time to research individual investments.

These apps typically have low fees, which makes them an attractive option for cost-conscious investors. In some cases, there may even be no fees at all. This contrasts with traditional brokerages, which often charge high commissions on trades.

Popular Platforms for Micro-Investing

M1 Finance

Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.

M1 Finance Logo
OVERVIEW

M1 Finance is a money-management platform that offers various trading options, including a robo-advisor and traditional brokerage services. M1 Finance is one of the best platforms for beginners, thanks to its simple platform and low fees. M1 Finance allows you to invest in fractional shares, which is a term for investing small amounts of money into a stock or ETF. You can start by buying as little as $1 worth of security and diversifying your portfolio with no commissions. M1 Finance also offers a feature called "pie invest," which allows you to reinvest your dividends and cash into your account automatically. This is a great way to grow your investment without having to do much work.

  • Intuitive pie interface
  • No commissions
  • Low account minimums
ACCOUNT MINIMUM
$100
ACCOUNT MANAGEMENT FEE
$0
MOBILE APP
iOS, Android
BBB RATING
A-

Public.com

Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.

Public.com Logo
OVERVIEW

When it comes to online investment platforms, Public.com is one of the newer kids on the block. Still, it offers many micro-investment opportunities for those looking to get started in the world of investing. Launched in 2019, Public.com offers commission-free stock and ETF trading and access to fractional shares of popular stocks like Apple and Amazon. In addition, Public.com has a social media-focused approach to investing, which allows users to follow other investors, discuss investments, and learn about different companies and industries. While Public.com does have some limitations (such as a lack of international stocks and no retirement accounts), it is a solid option for beginning investors looking for a user-friendly platform with low fees.

  • Commission-free stock and ETF trading
  • Cryptocurrency trading available
  • Social media feed and investor community
ACCOUNT MINIMUM
$0
ACCOUNT MANAGEMENT FEE
$0
MOBILE APP
iOS, Android
BBB RATING
A

Robinhood

Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.

Robinhood Logo
OVERVIEW

Robinhood is a commission-free stock trading platform that has gained a lot of popularity in recent years due to its simple design and ease of use. Some of its key features include the ability to trade stocks, options, and cryptocurrency without any commission fees. If you’re interested in crypto micro-investing, Robinhood is an excellent choice. It also offers a dedicated mobile app available for both iOS and Android devices, making it easy to manage your investment portfolio on the go. Regarding micro-investing, Robinhood is one of the best platforms out there. This is because it offers a very simple and straightforward way to invest in individual stocks without paying any commission fees. Robinhood traders can start investing with as little as $1 and become some of the first investors in companies that go public at the IPO price.

  • Allows cryptocurrency trading
  • User-friendly platform
  • Fractional share trading
ACCOUNT MINIMUM
$0
ACCOUNT MANAGEMENT FEE
$0
MOBILE APP
iOS, Android
BBB RATING
F

Acorns

Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.

Acorns Logo
OVERVIEW

Acorns is one of the most popular micro-investing platforms. It has over four million users and has been featured in many major publications. It is an excellent platform for beginners because it is very user-friendly. It also has a feature that allows you to round up your spare change and invest it automatically. The spare change is transferred from your bank account into an Acorns Invest account, where it is invested in a portfolio of ETFs. The best part about Acorns micro-investing is that you can invest your spare change for just $3 a month. Whenever your change adds up to $5, your funds will automatically be pulled from your funding source and invested through your Acorns account into your customized portfolio.

  • Automatically invests spare change
  • Low account fees
  • $0 account minimum
ACCOUNT MINIMUM
$0
ACCOUNT MANAGEMENT FEE
$1 to $5 a month
MOBILE APP
iOS, Android
BBB RATING
F

Final Thoughts

Micro-investing is a great way to get started in the world of investing. It is simple, easy to understand, and can be done with very little money. 

Micro-investing platforms and apps make it easy to invest small amounts of money and offer a variety of features that can help you grow your portfolio. 

If you are looking to invest in a new and exciting way but don't have a lot of money to spare, micro-investing can be an excellent solution.

About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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