“The man who moves a mountain begins by carrying away small stones.”
What is Micro-Investing?
Micro-investing is the habit of saving and investing small amounts periodically in a mutual fund. As the name implies, you invest super-small increments by buying mutual funds or a fraction of shares.
How is it different from regular investing?
The good news is that it isn’t very much different from regular investing. Micro-investing lets you invest lesser than Rs. 100 in mutual funds, which is generally not the case in regular investing. Most investing platforms come with a minimum barrier for investing, generally Rs. 500 or Rs. 1000. There are some products, though, that help you invest Rs. 100. But with micro-investing, you can invest as little as Re. 1.
Do I benefit from micro-investing?
Well, if your goal is to save for your retirement, then micro-investing won’t help you with it. What micro-investing really does is that it helps us gain momentum. In many surveys, young adults claimed the lack of savings as their primary reason for not investing. With micro-investing, anyone can start investing as it’s affordable.
Many millennials fall trap to analysis paralysis because of a wide range of financial products. Micro-investing apps like Roundups don’t require investors to make any significant decisions before getting started; thus, it reduces the barriers for young adults.
Some people are afraid to invest in mutual funds; micro-investing can help them start investing as they’ll invest much tinier amounts. With time, as these people gain trust, they can begin to invest a more significant portion in mutual funds.
Understanding the advantages of Micro-investing
(i) No Minimum Amount: Micro-investing apps such as roundups will help you invest as little as Re. 1. As mentioned earlier, one of the primary reasons millennials don’t invest is because of the lack of money.
(ii) Take advantage of the Snowball Method: The snowball method is a psychological technique that helps you build momentum. The method prompts you to start small and gradually build up your savings with time. This technique helps us build motivation and encourage us to stick with our plan!
(iii) Simple to use: Unlike other apps that offer you a plethora of options, micro-investing apps offer a few simple products that can help you get started. All you gotta do is download the app and create your investing account. You’re good to go within a few minutes.
(iv) Free to use: Apps like Roundups don’t charge investors for investing through their platform.
(v) Short-term goals: You can use the proceeds from micro-investing for short-term goals and emergencies. If you’re looking to buy a phone, laptop, or go for a vacation, micro-investing a great way to get started.
Limitations of Micro-investing
- It’s unlikely that you’ll make a killing from just micro-investing. It’s only a supplement to your entire personal finance strategy.
- Micro-investing cannot help you with your long-term goals. Saving for long-term goals takes more work; investing small amounts will not help you with it.
- Traders and professional investors would prefer investing in the stock market because of the variety of financial products.
Are there any Micro-Investing apps in India?
Roundups is one of the first micro-investing platforms in India. With Roundups, you can invest your spare change. Whenever you make a purchase, roundups will round the transaction to the nearest hundredth and invest the difference into a mutual fund.
For example, if you buy a pizza for Rs. 360, roundups will invest Rs. 40 in a mutual fund. Or say if you take an uber for Rs. 80, you will invest Rs. 20!
You can check it out here: Roundups- Invest Your Spare Change!
Roundups is excellent for beginner investors, especially if you don’t have enough to get started. If you’re looking to start saving or anxious about the stock market, apps like Roundups are a great platform to begin your investing journey.
Vikram Hirawat, Founder – Roundups
I’m no tech geek or a tech specialist. But I love to think about how emerging technology can match up to a strategic opportunity and provide a fundamental breakthrough. I like spending my time around Ideas, opportunities, and businesses that use disruptive technology to deliver a dream.