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What Is micro-investing?

Micro-investing is a relatively new trend that involves buying fractional shares in companies or ETFs (exchange-traded funds) instead of shelling out potentially hundreds of dollars at a time. (A fractional share is just what it sounds like: a fraction, or piece, of a single share.)

🤔 Understanding micro-investing

In layman’s terms, micro-investing is the process of saving and investing your spare change, rather than stuffing it into a piggy bank. By contributing manageable sums – sometimes as little as $1 – investors who are short on cash or unsure of their risk tolerance can dabble in the market without losing their life savings.

One of the primary purposes of micro-investing is to help retail investors get their foot in the door. But there’s another reason many have turned to this strategy: by putting a small portion of savings into the market, rather than a disappointingly low-APY savings account, investors have a chance to see their money grow faster.

How does micro-investing differ from traditional investing?

On its face, it may seem like the only difference between micro and traditional investing is the amount you contribute. And that’s largely true – until you factor in the broker.

You see, traditional brokers often charge a range of fees, including management, transaction, and expense ratio fees. Many also require investors to front a minimum balance to open an account (the “low” end usually starts at $500-$1,000), which proves prohibitive to hesitant or lower-income investors.

But micro-investing platforms aim to make investing accessible to the little guy – you. By removing excessive trading fees and minimum balance requirements, these brokers open up the world of compound returns to investors who otherwise may never have started.

What this means for you

A variety of platforms offer micro- or fractional share investing opportunities for investors of all stripes. And while many of them provide flexibility and ease of use, it’s still important to know what you’re getting into.

For instance, just because a platform caters to micro-investors doesn’t mean that it’s fee-free. Brokers like Acorns and Stash both let you round up your purchases and invest the funds when you reach a sum of $5 – though you’ll pay $1 per month for the privilege for balances under $5,000, and a percentage of your funds above that.

Robinhood is best known for eliminating all trading fees (on its free version), which means that you can buy and sell as little as $1 worth of stocks, ETFs, and even cryptocurrencies with no commission or account maintenance costs. However, Robinhood offers no portfolio advice or research, which can leave new investors in the lurch.

Or you can opt for an app like which lets you get started with as little as $100 with no monthly or trading fees and access to automated Investment Kits.

Many of these platforms also let you access premium services – for a premium fee, of course – to make the most of your micro-investing journey.

Disclosures is the trade name of Quantalytics Holdings, LLC., LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of's investment advisory services.

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