Micro investing is a great way for beginner investors to get started. By putting aside small amounts of money on a regular basis, it’s possible to build up a nest egg without really noticing. An automated investment app can help you do this. To find out which might be the best micro investing app for you, read on.
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There are a few investment apps around that can help you enter the world of investing. Which investment app is the best one for you depends on your investing goals and how much money you have to invest.
Some apps have a minimum balance requirement, for example, Wealthfront requires that you have a minimum balance of $500 to take up their standard investment management service.
If you’re a beginner investor, you might not have a chunk of cash to invest straightaway and therefore need to look at options where there is no minimum balance required. Asset management fees are also an important consideration – you’ll want to keep these as low as possible.
When you do your research, you’ll find that each investment app has different benefits and disadvantages. This article covers Acorns and Stash as these are particularly geared up for micro investing. However, WiseBanyan, Wealthfront, and Betterment are three apps well worth researching too.
Acorns is a good example of a micro investing app. The app works by linking to your bank account and rounding up the purchases you make to the nearest dollar, effectively putting your spare change aside so that you can invest it. (Note: Acorn’s round-ups don’t work with US Bank).
Your spare change is automatically deducted from your checking account once Acorns has put aside $5. Acorns then transfers these savings into a managed investment account made up of a diversified portfolio of ETFs.
The pricing for Acorns starts at $1 per month for its automated investing service. If you’re a college student, you can access this service for free.
Acorns has add-on products you can choose from such as Acorns Later (retirement saving via an IRA) and Acorns Spend which is a dedicated checking account. The cost for these add-ons reflects a slightly higher monthly fee.
Stash aims to simplify investing so that anyone can invest. You can choose from a range of investment themes to build a portfolio to reflect what matters to you. For example, there’s a Clean and Green theme which includes companies that produce renewable energy, or a Globetrotter theme that focuses on global industries.
Stash doesn’t offer automated investment management as Acorns does, but there is guidance to help you invest via Stash Coach, a personalized coaching tool for your account. The recommendations that Stash Coach provides are based on your risk profile. As well as this tool, there are plenty of investing tips to check out in the “Learn” section of Stash’s website.
If micro investing is your priority, Stash may work well for you as it offers fractional shares and you can invest as little as $5 each time. The app’s Auto Stash feature could help you build wealth for the long-term – this is where you’ll automate your investments according to a set schedule.
Stash costs $1 per month for daily balances up to $5,000. The first month is free. For daily balances greater than $5,000, an annual fee of 0.25% of the account’s value applies (charged monthly).
There is a premium service called Stash Retire, which offers a retirement account. This costs $2 per month for accounts with less than $5,000 and an annual fee of 0.25% for accounts with daily balances of more than this amount (again deducted monthly).
Before deciding which micro investing app to use, it’s worth checking out reviews from existing users to determine the pros and cons of each one.
Acorns appears to be popular according to reports online. One reviewer via the App Store gave the app a (5 / 5) review, saying that Acorns was a great partner to help them grow financially. On Google Play, one recent user claimed that Acorns is an amazing money saving app and has helped him save over $500 in change and dividends between February and August. Overall the app scores (4.3 / 5) on Google Play and (4.7 / 5) stars over at the App Store.
All apps have some negative reviews as you can imagine and this one is no different. One person said that for him, the investment payback was less than the $1 monthly fee while another wasn’t expecting Acorns to take $100 out of her bank account in just one week.
Stash scores (4.7 / 5) in the App Store and (4.2 / 5) on Google Play. The choice of investment themes seems to be appealing with one person highly rating the app, saying that he’d managed to get his hands in companies he’d wanted to be a part of for years.
Another user liked the app but said it takes a long time (5 hours in his case) to buy stocks if you need to transfer money from your bank account, so if you want to do quick day trades, look elsewhere.
A few negative reviews on Stash reported a loss on investments and lengthy waiting times for getting problems resolved.
If you’re not rolling in cash, but still want to invest with small amounts that you can afford, then Acorns and Stash are two apps that could help you do this. The main difference between the two is that Acorns offers automatic portfolio rebalancing, whereas you’d be more in the driving seat with Stash.
Do plenty of research before deciding which is the best micro investing app for you – and remember that with all investments, you may lose money as well as make money.
*The details in this article are correct at the time of publishing.