Micro Investing 101: A Complete Guide for Beginners

Written By
Julija A.
Updated
September 08,2022

Micro-investing is a great way to get started with investing. It's perfect for beginners who want to learn about the stock market and how it works.

In this article, we will explain what micro-investing is and how it works. We will also list some of the best micro-investment platforms and apps. So, whether you're just getting started or are looking for a new platform to invest on, read on for everything you need to know about micro-investing!

What Is Micro-Investing?

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.

So how does micro-investing work? 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

Although there are many micro-investing benefits, there are also some disadvantages you should be aware of before you start. 

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. 

For these reasons, it's essential to truly understand both the advantages and the disadvantages of micro-investing before deciding if it's right for you.

Micro-Investment Platforms: Benefits and Features

Micro-investing apps have become increasingly popular in recent years as more people look for simple and convenient ways to invest their money. But what exactly are micro-investment platforms, and how do they work?

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.

So, is micro-investing worth it? As mentioned, it can be a great way to get started in the world of investing with very little money. It is also an excellent way to build up a diversified portfolio over time without having to make significant lump-sum investments. 

However, it's crucial to understand how these platforms and apps work before you start investing any money. Otherwise, you could end up losing money instead of making a profit.

Popular Platforms for Micro-Investing

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
Learn More
On Official Website
ACCOUNT MINIMUM
$0
ACCOUNT MANAGEMENT FEE
$1 to $5 a month
MOBILE APP
iOS, Android
BBB RATING
F

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
Learn More
On Official Website
ACCOUNT MINIMUM
$0
ACCOUNT MANAGEMENT FEE
$0
MOBILE APP
iOS, Android
BBB RATING
F

Betterment

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

Betterment Logo
OVERVIEW

Betterment is a Registered Investment Advisor (RIA) that provides online financial advice to help people save for their future. The company offers both robo-advisors and human advisor services and has been in business since 2010. Betterment has over $33 billion in assets under management (AUM) and more than 730,000 satisfied customers. It is one of the largest independent robo-advisors in the world and one of the top micro-investing apps around. Regarding micro-investing, Betterment offers an automated investing service designed to help you grow your wealth over time. Your portfolio will be diversified across various asset classes and investments, and the annual fee is just 0.25%. The company offers low-cost ETFs (exchange-traded funds) with no minimum investment requirements.

  • Customized portfolios
  • Tax-coordinated portfolio
  • Low-cost ETFs
Learn More
On Official Website
ACCOUNT MINIMUM
$0
ACCOUNT MANAGEMENT FEE
0% - 0.40%
MOBILE APP
iOS, Android
BBB RATING
B

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 micro-investing 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 smaller 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
Learn More
On Official Website
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
Learn More
On Official Website
ACCOUNT MINIMUM
$0
ACCOUNT MANAGEMENT FEE
$0
MOBILE APP
iOS, Android
BBB RATING
A

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.

FAQ

Can I start investing with $100?

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You can start investing with as little as $100. In fact, you can start micro-investing with even less. If you're a beginner trader, you might want to consider using a micro-investing app. These apps allow you to trade in fractional shares, which means you can buy a piece of a stock for as little as $1 and sell it later when its value grows.

What are the three types of investors?

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All investors can be split into three categories: 

  • Pre-investors
  • Passive investors
  • Active investors

Pre-investors are individuals who have not yet started investing but are interested in doing so. They usually lack the knowledge and experience needed to make informed investment decisions.

Passive investors invest in assets such as index funds or exchange-traded funds (ETFs), while active investors take a more hands-on approach to investing.

What investment has the highest return?

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There is no single investment with the highest return. Different assets will perform differently at different times. Some investments, such as stocks or real estate, can grow in value over time. Other investments, such as bonds or CDs, provide fixed returns. 

To get the highest returns on your investment, you must diversify your portfolio and invest in a mix of different asset types. If you're unsure how to do that, try investing smaller amounts of money in a diversified portfolio. This is where micro-investing comes into the picture - it is a great way to diversify your portfolio without investing a lot of money.

What is a ghost investor?

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A ghost investor is an individual who invests in a company or project without any intention of ever claiming their stake. Ghost investors are often used to inflate a company's value or create the appearance of demand for a product. That is why ghosting is illegal and is often used in fraud schemes.

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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