November 9, 2020

Best Micro Investing App

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Micro investing apps allow anyone to invest in stocks with a few dollars. Learn about the best apps for beginners, like Acorns, Robinhood and Stash.

Investing can be really scary. Two main concerns holding beginners back are not having enough money and not knowing how to invest.

Luckily today, practically all barriers to the stock market have been removed. Investing is no longer just for those with money. New investors have never had so many options.

Micro investing apps have made it possible to buy stocks with just a few bucks. And even better - you can invest with no experience or knowledge.

Read on for a list of the best micro investment apps for beginners.

Bottom Line: Micro investing won't make you rich by only investing small amounts. But micro investing apps are a great way to take that first baby step into the world of investing.

What Is Micro Investing

Micro investing apps allow you to invest very small amounts of money. This makes getting started easier for beginners without a lot of capital. It's also less risky since you don't need to commit a lot of money.

Traditionally, when you buy a stock, you have to say how many shares you want to buy. So if you want to buy stock in a company, you need to save up until you have enough for a full share.

Thanks to technology, micro investing apps allow you to purchase just a fractional share. You can state the exact dollar amount you want to buy. For example, instead of needing $3,000 for one share of Amazon stock, you can invest just $5 and own a tiny piece of the company.

Another thing is that micro investing apps are designed with Millennials in mind. They have simple interfaces that even those with no investing experience can figure out.

Have you used a micro-investing app before?

Best Micro Investing Apps for Beginners

The micro investing apps on our list are all easy to use for beginners and support fractional shares. Each one is a little different and has its own unique features. Read on.

All these micro investing platforms are members of SIPC (Securities Investor Protection Corporation). This protects your investments up to $500,000 per account should the company go out of business.

Acorns: Best Spare Change Investing App

Acorns is the original spare change robo investment app. There is no minimum deposit.

You link your debit and credit cards and Acorns will automatically round up the change from your purchases. Once your round-ups reach $5, they'll be automatically invested. This allows you to invest money without thinking.

Acorns is a robo advisor. It will create a portfolio for you based on your age, investment goals, and risk tolerance. After that, it handles all the portfolio management, including automatic rebalancing.

Your money is invested in ETFs (exchange traded funds). These are collections of stocks (possibly even several hundred) in one fund. This means every dollar you invest is diversified across hundreds of companies.

Acorns also has a unique Found Money feature. This lets you earn extra money in your investing account when you shop with Acorn's 300+ partners.

Best for:
Those who have trouble saving money on their own. It's also good if you just want the app to handle everything.

Cost:
Acorns has three pricing tiers: $1 per month for a basic taxable account; $3/month to add an IRA retirement account and a checking account; and $5/month to add investment accounts for your kids.

A dollar every month (or $12 per year) might seem low, but it's high if you don't have much money. If you only have $10 in the account, $1 is 10%. But once you have a higher balance, the fee just becomes a small fraction.

Robinhood: Best for DIY Investing

When Robinhood came onto the scene in 2013, it shook up the investing world by offering completely commission-free trades. You can invest in stocks, ETFs, options, and cryptocurrencies with no trading fees.

There is no minimum investment to get started. You can purchase fractional shares with as little as just $1.

Robinhood is a completely DIY brokerage platform. It provides no guidance at all. So you should have an idea of what you want to invest in.

The mobile app is very basic, so it's easy to understand for beginners (even if you've never traded before). But for more advanced investors, you'll most likely find that the research and tools are not enough.

Robinhood only offers individual taxable accounts. There are no retirement account options.

Best for:
Someone comfortable with trading and managing their own portfolios. It's also a good choice for new investors who want to try out trading options and crypto.

Cost:
The basic account is free. It also offers a premium Robinhood Gold account for $5 per month, which offers margin trading. There are no trading fees.

Stash: Best for Learning About Investing

For those who want a little bit of investment advice, check out Stash Invest. You can start investing with $5, and fractional shares are available from just 1 cent.

Stash starts by asking some questions about your goals, risk tolerance, and interests. Then the app will give you investment recommendations that match your needs.

You still have full control to choose what you want to invest in. Stash will help you build a personalized portfolio from scratch, but does not make your investing decisions for you. Managing your portfolio is still your own responsibility.

Stash also has a round-up feature. In addition, it can analyze your bank account and automatically set aside extra savings for you in your cash balance. You can then invest them when you want.

Best for:
Those learning how to invest independently and want a little bit of guidance.

Cost:
$1 per month for a taxable account; $3 per month for a retirement plan; and $9 per month to add investment accounts for your kids. There are no trading commissions.

You can also add a Stash banking account with any plan option. This includes a Stock-Back debit card that rewards you with stocks when you shop at participating companies.

Public: Best Social Investing

Public is one of the newer micro investment apps on the scene. Just like the name suggests, Public makes investing interactive by combining it with a social community.

Public organizes stocks into themes, so you can just choose the categories you're interested in. Themes include things like Women in Charge, Growing Diversity, Green Power, Cannabiz, and tons more. This lets you easily search for companies and causes that you care about.

A unique aspect of Public is the social forum. You can follow other users, see their portfolios, and join chats and ask questions. This allows you to get inspiration and learn from thousands of fellow investors in the community.

There is no minimum investment to get started. You can invest in stocks starting with $5.

Best for:
Beginners who enjoy the social aspect to investing.

Cost:
Free. Public charges no account fees or trading commission fees.

For more experienced investors, Public supports short selling. This is one of the ways Public makes money.

M1 Finance: Best Hybrid DIY + Robo Investing

M1 Finance has a very interesting concept. You create your own investment portfolio and M1 will do the trading and managing for you. This gives you total control over your investments, but none of the work.

The minimum investment is $100 ($500 for an IRA account). After that, you can continue to add deposits in any amounts of at least $10.

M1 portfolios work a little differently. Each portfolio is called a "Pie." Each Pie can contain up to 100 slices, with each slice being one investment. This lets you see your portfolio visually.

For example, if you want 10% of your investment to be in Apple, set that as 10% of your Pie. If you fund $100, M1 will use $10 of that to purchase Apple stocks.

Whenever you add funds or edit your pie, M1 will automatically buy and sell investments for you accordingly. It'll also rebalance your portfolio when your Pie drifts from the original allocation. This is usually a time-consuming task to do yourself. But with M1, you can just rebalance with one click.

For beginners, if you're not sure what to invest in, M1 also offers 80+ prebuilt portfolios created by their experts.

Best for:
Those who want a say in their investments, but don't want to manage their own portfolios.

Cost:
Free with no trading fees. There is also a premium M1+ account that costs $125 per year. This gives you benefits like an extra afternoon trading window, cashback on debit card purchases, and lower borrow rate.

    M1 Finance

    Transfer Your Account and Earn Up to $2,500

    Initiate your transfer of another brokerage account within 60 days of signing up for M1 to receive a bonus.

    TransferBonus
    $100,000 โ€“ $250,000$250
    $250,001 โ€“ $500,000$500
    $500,001 โ€“ $1,000,000$1,000
    $1,000,001+$2,500

    Payments for eligible transfers will be paid 90 days after the account transfer is received. Offer is valid for direct broker transfers received through the Automated Customer Account Transfer Service (ACATS) only. Offer is not valid with ACH deposits, wire transfers or direct 401k rollovers.

Betterment: Best Micro Investing Robo Advisor

Betterment is one of the most popular robo advisors for hands-off investing. There is no account minimum to get started.

You can set up multiple investment accounts for different goals, such as for retirement, a large purchase, or an emergency fund. Each goal will have a different investment strategy based on the risk level.

It supports fractional shares so that every dollar you fund will be invested. Similar to other robo advisors, your investments are held in low-cost ETFs.

Betterment also automatically rebalances your portfolio. And it offers tax loss harvesting to all users, which is a strategy that reduces how much you pay in taxes.

Best for:
Long-term investors who want to be completely hands-off.

Cost:
0.25% annual management fee for the basic Betterment Digital account (for every $1,000, the fee is $2.50); and 0.4% for the Betterment Premium account, which includes access to human financial advisors. This is optional for account balances $100,000+.

Stockpile: Best for Teens

Stockpile lets you invest in fractional shares of over 1,000 stocks and ETFs starting with $5. There are no account minimums.

The big difference with Stockpile is that it's the only micro investing app that allows you to buy stock gift cards. You can buy a gift card starting with just a value of $1.

This is a rewarding gift for kids and teens that will help their futures. You can also open a custodial brokerage account for your kids. They can monitor their investment account and place stock trades (with your permission, of course).

Best for:
Giving kids and teens a head start in investing.

Cost:
$0.99 per trade to buy and sell. E-gift cards cost $2.99 for the first stock and 99ยข for each additional stock, plus a 3% debit or credit card fee. Physical gift cards are $4.95 to $7.95 depending on the face value.

Can You Get Rich From Micro Investing?

If you're really just investing your loose change, or $5 here and there, you're not likely to become rich. Investing micro amounts will also give you micro results.

But that said, investing any dollar amount is better than nothing at all. Earning some returns will still give you more growth than if your money just sat in a bank account.

To really build a nest egg for your future, you'd need to invest larger amounts of money. The sooner you start investing, the more time you have for your money to grow. This gives you higher chances of reaching your goals.

For example, if you start investing at age 25, you need to invest $3,500 per year to reach $1 million by age 65 (assuming 8% annual return). But if you start at 35, you'd need to invest $8,000 per year to become a millionaire by retirement age.

What are you saving and investing for?

Pros of Micro Investing

  • Low entry: Beginners can get started investing with very little money. Most have no account minimum.

  • Less risky: You don't need to risk too much of your money, unlike investing large sums.

  • Create diversification: With fractional shares, you can buy stocks in more companies. For example, if you have $50, you can pick ten different stocks to invest in with $5 each. This also reduces risk.

  • Easy to use: Micro investing apps have a simple interface and are intuitive for beginners. Many will even guide you to choose investments or include mini lessons.

  • Banking included: A lot of these apps include a free banking account. Usually they don't charge any service fees. This is a great option if you want banking and investing under one roof.

Cons of Micro Investing

  • Limited investment options: Most micro investing apps are mainly focused on ETFs. Some will also let you choose individual stocks. But you won't find products like mutual funds.

  • Limited customer service: A lot of these apps only provide email assistance. Some many not even have phone access.

Bottom Line: Are Micro Investing Apps Worth It?

With micro investing apps, not having enough money is no longer an excuse not to invest. Now everyone can invest, no matter how small your budget.

If micro investing can get you started, then it's worthwhile. As you gain more experience, you can decide if you want to move to a more advanced investing platform.

Just know that micro investing small amounts won't make you rich. As you earn more, be sure to increase your contributions so you can reach your goals.

Would you ever try an investing app?

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

CreditDonkey is a paid Affiliate/partner of Stash. Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.

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