Micro-investing is becoming increasingly popular as a simple way for people to invest small amounts of money on a regular basis. These platforms are changing the investment game by making it affordable and accessible to everyone.
In this article, we’ll explore the latest trends and developments in micro-investing. We want to touch on the reasons for the popularity of investing platforms and consider some well-known micro-investing services.
The Future of Micro-Investing Platforms
Micro-investing platforms are experiencing unprecedented growth. With an impressive projected compound annual growth rate (CAGR) of 21.00% from 2024 to 2034, this sector is on the verge of a major boom.
Key Statistics:
- Expected Base Year Value (2024): $665.7 million
- Anticipated Forecast Value (2034): $4,467.2 million
- Estimated Growth (2024 to 2034): 21.00% CAGR
The numbers don’t lie. Starting at a value of $665.7 million in 2024, the market is expected to reach $4,467.2 million by 2034. This dramatic surge presents a unique opportunity for investors to capitalize on this emerging trend.
Business Models Of Micro-Investing Platform
Micro-investing platforms have revolutionized how individuals can participate in the financial market. By prioritizing accessibility and convenience, these platforms enable users to easily manage their investments directly from their smartphones. Let’s explore some of the prevalent models in the micro-investing space:
- Round-up Model: The round-up model links users’ investment accounts to their debit or credit cards. Each transaction is rounded up to the nearest dollar, and the spare change is automatically invested into a diversified portfolio of stocks and bonds.
- Subscription Model: This model charges a monthly fee for access to investment services. Subscribers typically gain access to a robo-advisor that offers algorithmic investment advice and manages their portfolio on their behalf.
- Fractional Share Model: In the fractional share model, users can invest in fractional shares of stocks and exchange-traded funds (ETFs) with minimal amounts, sometimes as low as $1. Users can either choose from a predefined list of investment options or create their own custom portfolios.
- Cashback Model: Under the cashback model, users earn cashback rewards on their purchases. These rewards can then be automatically invested into a portfolio of stocks and bonds, seamlessly integrating spending with investing.
- Social Trading Model: This model allows users to follow and replicate the investment strategies of successful investors on the platform. By observing and copying these strategies, users can benefit from the expertise of experienced investors.
- Partnerships: Micro-investing platforms often form partnerships with financial institutions such as banks and brokerage firms. These partnerships provide access to a wider range of investment products and services while generating additional revenue streams for the platforms.
Best Micro-Investing Platforms on Smartphones
Don’t abuse the number of apps on your iPhone. Otherwise, don’t be surprised when it starts to work slowly. You can also quickly clear the memory if you download a cleaner app from the App Store, which removes duplicate photos, allows you to compress videos and removes garbage from the memory. Bonus – the ability to create a protective partition in the smartphone’s memory.
Robinhood
First launched in 2013, Robinhood is a leading micro-investing app known for commission-free trading. It was the first to offer this feature, which attracted a large user base. Besides stocks, Robinhood lets you trade options, index funds, and cryptocurrencies without any commission. For more investment options, you can upgrade to Robinhood Gold for $5 per month. However, note that Robinhood does not support mutual fund trading.
Acorns
Acorns is aptly named; just as a small acorn grows into a mighty oak, small investments can grow into substantial wealth. This app not only helps you invest but also educates you on money basics like taxes, retirement, and crypto. Acorns offers two plans—Personal ($3/month) and Family ($5/month)—and isn’t free. After linking your debit card, it rounds up purchases and invests the spare change once you have over $5. You can either trust the app to make investment decisions or set your preferences for guidance.
Moneybox
Invest spare change effortlessly with Moneybox, rounding up daily purchases for micro-investing. Beyond round-ups, you can make one-time or regular deposits, transforming how you save.
Choose from three risk profiles—cautious, balanced, or adventurous—tailored to your preferences. If you prefer no risk, Moneybox offers savings accounts, too. Planning for retirement? Explore the Moneybox Personal Pension account.
Webull
Launched in 2018, Weibull is a newer micro-investing app that offers a compelling incentive to attract users—free stocks! New users receive 2 free fractional share stocks upon opening an account. After making a deposit, they get 4 more, potentially worth thousands of dollars.
Webull isn’t just for stock trading; it also supports trading cryptocurrencies, options, and over-the-counter (OTC) securities. Plus, it has no account minimum, making it accessible for everyone.
Criteria for Selecting the Best Micro-Investing Platforms on Smartphones
With hundreds of investment apps available across Europe, choosing the best requires careful evaluation. We highlighted apps that offer essential features and unique benefits tailored for European markets.
Key Criteria
- Fees and Commissions: We focused on apps with low or no management fees, account minimums, or trading commissions. Ideal options include commission-free trading and fractional shares.
- Investment Choice: Comprehensive asset selection, including stocks, ETFs, and mutual funds, provides diversification. Apps offering access to global markets and fractional shares stood out.
- Account Accessibility: Seamless online account setup, easy funding options, and low minimum investments simplify the investing process. User-friendly dashboards enhance the experience.
- Usability: Intuitive designs and easy order execution are crucial. Top apps feature sleek interfaces and mobile optimization.
- Education: Investing guides, videos, and AI-powered chatbots help users make informed decisions.
- Security: High encryption standards, authentication protocols, and transparency build investor confidence.
- Reputation: Positive app store ratings and expert reviews indicate credibility.
- Unique Offerings: Innovative features like social trading, AI analytics, and socially responsible portfolios differentiate top apps.
Conclusion
Micro-investing platforms are an opportunity for everyone to join the world of investing. Money should work and that’s true, but the barrier to entry for most types of investments is too high. Even if your budget allows for one large investment, wouldn’t it be better to split the funds into 10 segments to diversify the risks? That’s the beauty of micro-investing.