You don’t need a fortune to start building wealth. Thanks to the rise of microinvesting, even those with just a few bucks to spare can begin their journey to financial independence. The best part? You can start with as little as $5. For many Gen Zers and younger Aussies, this trend is becoming a game-changer in how they approach money—no need to wait until you’re rich to start investing.
What is Microinvesting?
Microinvesting is exactly what it sounds like: investing small amounts of money, often as little as $5, through apps or platforms designed for everyday people. It’s become especially popular with younger people or those on lower incomes who might not have a lot of extra cash lying around but still want to start building wealth. Apps like Raiz or Spaceship allow you to invest in things like stocks, bonds, or ETFs (Exchange Traded Funds) with minimal risk and minimal investment.
So, why are young Aussies jumping on this trend? Well, savings accounts aren’t cutting it anymore. With interest rates hovering around 4.5%, keeping your money in a savings account won’t get you far—especially with the rising cost of living. Meanwhile, investments have historically averaged returns of 10% or more, which is hard to ignore, explains Yahoo Finance. Microinvesting, then, becomes an accessible way to get your money working for you—even if you’re just starting with a handful of change.
What’s Your Goal?
Before you dive in, though, it’s important to think about what you want to achieve. Are you just testing the waters, seeing if investing is something you want to commit to long-term? Or do you have a specific goal, like saving for a home or paying off debt? The clearer your goal, the easier it’ll be to figure out your strategy.
If you’re just getting your feet wet, microinvesting is a low-risk way to build confidence. But if you’re trying to save for a first home deposit, you might be better off looking into programs like the First Home Super Saver (FHSS) scheme, which offers tax benefits and is more suited for saving a large lump sum.
Setting a Budget
“Micro” means different things to different people. For some, $5 is micro. For others, it might be $500. Whatever the amount, it’s crucial to stick to a budget you can afford. Don’t invest more than you can afford to lose, and if you’re in debt, it might be worth focusing on paying that off first. Microinvesting shouldn’t put you in the red.
Now comes the fun part: picking your platform. There are tons of apps to choose from, so it’s a good idea to compare costs, fee structures, and the investments they offer. Platforms like Raiz, Spaceship, or CommSec Pocket are popular, but each has its pros and cons. Take the time to read reviews and check out comparison sites like Finder or Canstar. But don’t overthink it—just start!
What to Invest In
Your investment choices will depend largely on your risk tolerance. If you’re okay with a bit of risk for potentially bigger returns, you might choose stocks or ETFs. If you’re after something safer, you might go with bonds or other low-risk investments. Either way, it’s essential to stay true to your goals and risk appetite. And hey, if you care about doing good, many apps offer ethical investment options focused on sustainability or social causes.
