Whether you prefer to oversee your investments in real time or you’d rather take a hands-off approach to growing your money, micro investing is a solid option. Investing may seem intimidating, but each of these micro-investing apps provides an educational component designed to help you make the best decisions about your money.
If you want to save for retirement, build up a fund to make a down-payment on a home, or pay cash for your next car, making small deposits into an investment account allows you to watch your money grow. You may potentially receive better returns than a low-interest savings account.
Best Micro-Investing Apps
- Robinhood: Best overall micro-investing app for beginners in 2020
- Acorns: Best for investing a little at a time
- Stash: Best for the beginning investor
- Betterment: Best low-cost micro-investing app
- Public.com: Best investing app that you may not have heard of
Robinhood: Best overall investing app for beginners in 2020
With Robinhood, you can transfer money to your bank account anytime for free. The app is straightforward, so there’s no learning curve to master before you can start investing. Opening an account is free, and there’s no minimum starting balance requirements.
Robinhood is a great choice for beginning investors. It doesn’t have a lot of extras, which could confuse someone who is just starting out.
You can use Robinhood from your phone via the app, or you can access your account on your desktop computer or tablet. The “Collections” section helps you discover new investment opportunities organized by category.
Acorns: Best for investing a little at a time
Acorns allows you to attach its investment app to your bank account and round up each purchase to the nearest dollar. They charge $1 per month for the service. If you want an all-in-one investment account that includes a checking account, debit card, and retirement account, there is a $3 per month charge. With the family account, you’ll get investment accounts for your kids, a retirement account, checking accounts, and exclusive promotional offers. The family tier costs $5 per month.
With the Found Money extension, you’ll get bonuses when you shop with one of Acorn’s 250+ partners.
Stash: Best for the beginning investor
Stash allows you to invest with just a few cents, helping you gain access to shares that you may not otherwise be able to afford. The app also has a suite of investing and savings tools that you can set on autopilot. You can round up each of your purchases to the nearest dollar and invest your “spare change” without impacting your budget.
This is a great micro-investing app for people who want to base their investment choices on a certain cause or theme. “Auto Stash” lets you add to the account weekly or monthly with automatic deposits as small as $5. Personalized coaching allows you to use financial tools to make the most of your investments, even if they are small.
Betterment: Best low-cost investing app
Betterment handles all of the trading and rebalancing that goes with managing an investment portfolio. This goal-based tool is popular with investors that are retired, want automatic rebalancing, or those who want a hands-off investing app.
With Betterment Digital there is a 0.25% fee on your balance that’s assessed yearly. If you upgrade to the Betterment Premium plan, you’ll get unlimited access to certified advisors over the phone. This service costs 0.40% of your balance yearly. Betterment also provides more in-depth advice with prices starting at $199.
Public.com: Best investing app that you may not have heard of
When you invest with Public.com, you can follow other investors and become aware of new companies that could be great investment choices. Don’t worry about stock prices that are out of reach. You can invest as little as $5 in a single stock, no matter the price. You can also choose to invest in EFTs from Vanguard and BlackRock, among others, in fractions. There are no commission fees with Public.com.
If you have questions about an investment, you can join a group chat or start a new conversation to help guide you through your options. If you want to invest in a company long-term, you can simply drag and drop that investment to it’s dedicated Long-Term Portfolio via the app.
Stock themes help you narrow down your stock choices with criteria that’s important to you. Betterment also offers an investor referral program to help you earn free stock.
Still have questions about micro-investing? FAQs
What is micro investing?
With micro investing, you buy small parts of multiple shares instead of one single share. Traditional brokerage accounts may enforce account minimums, which prevent many people from investing their money. Micro-investing platforms, like the apps highlighted here, make investing accessible to anyone who can open an account online. Small savings add up over time. You can micro invest with rounded up transactions from your bank account and automatic deposits into your investment account.
You won’t have to deal with investment minimums or per-transaction fees with micro investing, which helps maximize the amount of money you have in your brokerage account.
What is an exchange traded fund (EFT) and how can it help my money grow?
An EFT represents a group of investments that gains and loses value throughout the day, just like a single stock. EFTs can include commodities, bonds, and stocks, in addition to other investment types.
Investing in EFTs is a great way to diversify your portfolio. You can buy EFTs through Betterment, as well as through other micro-investing apps.
What is a stock and how does buying stocks help my money grow?
When you purchase a stock, or a fraction of a stock, you buy a tiny piece of a company and you share in its profits and losses as long as you own that stock. The company sells stock to raise money so they can grow their business. If the company is “public” it sells stock through a stock market exchange, like the New York Stock Exchange or the Nasdaq.
If the price of the stock goes up and you choose to sell it, you’ll receive more money than you paid for the stock. Some stocks pay dividends, which means that shareholders get a payout each quarter.
Long term, the average stock earns 7% to 8% after inflation. So, you’d have more than $8,000 if you invested $1,000 in stocks 30 years ago.
Is micro investing with an app safe?
All micro-investing apps platforms have to register with the Securities and Exchange Commission as a broker-dealer. While micro-investing with an app may be an easy way to build savings, you shouldn’t expect big results from tiny deposits. If micro-investing is your only savings tool, you may want to take advantage of the tax breaks you’ll get with a 401(k) or IRA to save for retirement.
It’s important to remember that micro investing carries the same amount of risk. You can still lose money when you round up your purchases and invest your spare change.
What is a fractional share of a stock?
You can buy part of a stock with fractional shares. Some stocks cost well over $1,000, but they are a good investment with growth potential. High-priced stocks are accessible, regardless of how much money you have to invest if you can purchase a piece of a single stock. Public.com is one micro-investing app that allows you to purchase fractional shares of expensive stocks.
What is margins trading and will it help my money grow?
Margins trading means you are working with borrowed funds. None of the apps highlighted here allow margin accounts. If you choose to engage in margins trading, you have the potential to make a lot of money. Of course, there are also many risks, including losing all of your money. Margins trading isn’t usually a good choice for beginning investors and those who use investing to grow their savings over time.
“Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market.” -Robinhood app
If you are interested in trying margins trading, you can do so through Robinhood Gold, which lets you borrow money from Robinhood so you can buy stocks.
Can I buy penny stocks with micro-investing apps?
Stock shares worth less than $5 are called penny stocks. While they may be tempting since it’s so easy to buy a large number of penny stocks with a small amount of money, low priced stocks often indicate that a company is struggling. These investments are volatile, and not generally a good choice for everyday investors.
While micro-investing apps like Acorn help you invest your spare change, they aren’t penny stocks. The money adds up over time, then you decide how to invest it through the app.
Can I day trade with micro investing app to make a lot of money in a short amount of time?
Day trading refers to the practice of buying and selling a stock during the same day. These short term transactions help investors make money quickly if the strategy works. With long-term investing, you base your stock purchase decisions on your overall feeling that the company will grow over time. Day trading seeks to take advantage of small changes over the course of a day, which puts investors at a much greater risk of losing money.
If you want to get started day trading, check out the TD Ameritrade day trading app, designed for advanced and intermediate investors. Webull offers a free day trading app with no minimums or commissions. They’ll also give you a free stock when you open an account and a second free stock when you make a deposit to your Webull account.
Micro investing apps allow you to direct your spare change or deposit small amounts of money into an account and watch it grow over time. You can have complete control over which stocks you buy, which is a great way to experience success and hone your investing skills.
Many apps have an education component that will help you make good decisions and learn more about investing in general. A big part of successful investing is understanding how your decisions affect your potential return.
You may rely on your investments to reach financial goals like funding your retirement, making a down-payment on a house, or starting a business. It’s important to remember that micro investing may help your money grow, but you’ll likely see micro results. If you have a specific financial goal in mind, use an online calculator to figure out how much you need to invest every month.
If you’ve never used an investing app and you are a beginner when it comes to choosing specific investment types and companies, any of the five best micro-investing apps we highlighted here would be an excellent choice.