How To Start Investing With Just $5 Using Micro-Investing Apps
Investing can feel like a big, intimidating commitment. You might think you need a pile of cash or a Wall Street background just to get started. But what if you could start growing your money with just a few dollars? When micro-investing, you invest small amounts, even spare change, so you can dip your toes into the market without jumping all in.
What’s micro-investing?
Micro-investing is exactly what it sounds like. Instead of needing a large amount of upfront capital, you can invest small amounts of money, which makes the stock market feel more accessible if you’re just starting out or on a limited budget. The idea is that tiny, consistent contributions can add up, giving your money the potential to really grow over time.
How to get started micro-investing
You have options when wanting to begin micro-investing, whether that’s through an app that puts your spare change into the market, a card that automatically gives you stock-back rewards on purchases or through a brokerage that offers fractional shares. With fractional share investing, you buy a portion of a single share of stock instead of having to buy the full share.
Charles Schwab’s Stock Slices program offers investors the ability to purchase a fractional share of any stock listed in the S&P 500 — from a single slice (fractional share) up to 30 — for as little as $5 each. Fractional shares at Schwab are traded commission-free online, similar to regular stocks. Through this feature, investors can own a small part of a big-name company with only $5, $10, $20 or however much they feel comfortable investing.
Charles Schwab
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
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Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
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Bonus
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Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™
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Investment options
Stocks, bonds, mutual funds, CDs and ETFs
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Educational resources
Extensive retirement planning tools
Pros
- $0 minimum deposit for active investing
- No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
- Offers extensive retirement planning tools
- Users can get on-demand advice from a professional advisor/Schwab expert
- Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
- Award-winning thinkorswim® trading platforms and all their cutting-edge tools are now available at Schwab.
- 24/7 customer support access by phone or chat
- Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support
Cons
- Specific transactions may require commission fee
- Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals
Then there are micro-investing apps that roll over your spare change from everyday purchases into the market, so you’re investing while going about your day. You can usually find fractional shares available on these platforms, too.
Acorns’ Round-Ups feature links to your credit and/or debit cards and automatically rounds up your purchases to the nearest dollar, then invests that change into the market. You can even choose to boost the round-ups and multiply the spare change amount by 2X, 3X or 10X.
Acorns
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account, $5 minimum to start investing
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Fees
Fees may vary depending on the investment vehicle selected. Monthly plans include: Bronze ($3 per month), Silver ($6 per month), and Gold ($12 per month)
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Bonus
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Investment vehicles
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Investment options
Diversified ETFs which include more than 7,000 stocks & bonds
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Educational resources
Pros
- $0 minimum deposit to open an account
- Invests your spare change from everyday purchases
- Customizes users’ portfolios around their financial goals, timeline and risk tolerance
- Automatically rebalances portfolio
- Offers Acorns Sustainable Portfolios for ESG investing
- Access to educational articles and videos to learn about investing
Cons
- Monthly fee can be steep if you’re not investing much
- Investment options are limited
Stash offers Stock Round-Ups, which automatically invest spare change from qualifying purchases made with Stash’s very own debit card, the Stock-Back® Debit Mastercard. Cardholders can also earn stock back (sort of like with cash-back credit cards) in the companies they purchase from.
Stash
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Minimum deposit and balance
Bank account: no minimum; Smart Portfolio: $5; Brokerage, Roth and traditional IRAs: $0.01
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Fees
Fees vary based on the pricing tier: Stash Growth is $3 a month and Stash+ is $9 a month
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Investment vehicles offered
Robo-advisor, Traditional and Roth IRAs, Brokerage account, Custodial Accounts, Bank account
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Investment options
Pros
- Access to a robo-advisor, brokerage account, bank account and retirement accounts in one app
- Variety of stocks from different companies and ETFs
Cons
- Hefty annual fee of at least $36
How much can micro-investing grow over time?
Let’s say you micro-invest $5 each day, whether that’s through spare change and/or fractional shares. That’s an investment of about $150 a month. Assuming an average annual return of 6%, compounded daily, that grows to a balance of approximately $1,860 over the course of a year. After five years, it’s around $10,500; after 10 years, nearly $25,000 and after 20 years, almost $70,000.
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