Micro-investing is becoming a popular alternative to traditional savings accounts and piggy banks for many Australians. They offer a way to get started in the investment world. Traditional investment brokerage accounts require significant deposits to get started. However, Micro-investing requires little to no initial investment. Instead, people can sign up with a dollar or no initial investment in some cases.
Micro-investing requires small regular deposits or even round-ups from purchases. So, for example, a purchase of $5.25 would mean a $0.75 micro-investment. Some users set up a regular weekly deposit for a small amount, for example $5.00 or so. Micro-investment accounts are generally easy to set up. Many users don’t even notice the money as it’s such small amounts. As investments, these do have some risks compared with traditional savings accounts that accrue compounded interest.
There are several apps getting in on micro-investing in Australia. These include FirstStep, Raiz Invest and CommSec Pocket. FirstStep uses spare change from everyday purchases. Users can also make regular timed deposits. FirstStep invests money in low-cost ETFs and other instruments for users. There are small monthly fees associated with the management of accounts. Over $5,000, the fee is charged as a small annual percentage of the account instead.
Raiz Invest requires no initial deposit and works in much the same way as FirstStep. Recurring investments and round ups are placed into investments like ETFs. Users select the portfolio they’d like based on the level of risk they’re comfortable with. It’s free for users to make withdrawals and deposits. There is a monthly maintenance fee associated to users’ accounts. Over $10,000, the fee is charged as an annual percentage of the account instead.
Lastly, CommSec Pocket is a little more traditional. Users must invest at least $50 at a time. The investment goes into an ETF. This is still a micro-level investment compared to traditional ETFs, which tend to require at least $500 or $1000 investments at a time. CommSec Pocket charges a brokerage fee of about $2 per transaction. Though this is more than the competitor apps, it’s still a savings compared to traditional broker fees of up to $30 per transaction. Transactions over $1000 are charged fees as a percentage, instead of at a flat rate.
These are just some of the apps on micro-investing in Australia. Micro-investing is a great way to get started in investing, as well as a unique way to save money. However, it is always best to research the app you are interested in before investing.