Investing Investing Basics

What Is Micro-Investing and Is It Worth It?

Micro-investing with fractional shares and round-up transfers can help you grow your money a little at a time.

By Lance Cothern
and Lauren Graves

Edited by Jess Ullrich

Updated Dec. 17, 2024

You don’t need a lot of money to start investing. With micro-investing, you can invest with pennies.

Micro-investing involves buying small or fractional shares of investments, often stocks or ETFs, with a few dollars at a time or less. Often, you can do this with your spare change, which is possible with the help of micro-investing apps and platforms that round up your purchases. Micro-investing is every bit as legitimate as any other form of investing, and many of the best platforms that offer bite-sized buys have low or no minimum requirements and few fees.

But is micro-investing worth it? It certainly can be if you do it right. Learn more about whether this investing style is right for you and how to get started.

How does micro-investing work?

Micro-investing is the act of investing a little at a time. This can be done by purchasing partial or fractional shares of assets, like stocks and exchange-traded funds (ETFs). Doing this lets you spread your money out across a wide range of investments to diversify your portfolio even if you aren’t flush with cash.

If you only have a little bit to invest and were only to purchase assets with high share prices, your portfolio would be thin, leaving you more vulnerable to big losses. Fractional-share investing could make it possible to buy a share of a massive technology company with a $2,000 per-share price, for example, with just $1. You would own 0.0005 shares, but you’d still be in.

Micro-investing pairs well with dollar-cost averaging, which involves investing the same amount of money on a regular cadence — like every week or month — rather than timing your decisions according to the market. It’s about buying when you can and staying the course.

But a dollar-cost averaging approach isn’t the only way to micro-invest. Some platforms automate your purchases by rounding up transactions from a linked bank account to the nearest dollar and investing your spare change. This is often called round-up or spare change investing.

Who micro-investing is best for

In general, micro-investing may be ideal for you if:

You’re new to investing
You don’t have very much money to invest
You’re comfortable with at least a moderate amount of risk
You want to invest more often

Why micro-investing is worth it

Micro-investing can add up if you stick with it. But more importantly, it can help you get over the hurdle of starting and build a habit of investing.

Here are some examples to show you how valuable micro-investing can be.

Example 1

A person decides to cancel their $14 monthly streaming subscription and invest the money in an ETF with a 10% annual return (the average stock market return, based on the S&P 500). They invest this amount every month for 40 years. At the end of 40 years, they have just shy of $79,000 without accounting for fees.

Example 2

Another person decides to use a round-up investing feature. They make about 70 transactions from the linked account per month. If each payment resulted in a 50-cent round-up, the person would invest $35 monthly. They do this every month for 10 years, and the investment has 10% annual returns. After 10 years, they have roughly $7,000 without accounting for fees.

How to start micro-investing

1. Determine your risk tolerance

Before you start investing, know how much risk you’re comfortable with. This is your risk tolerance, and it’s a measure of the loss you can handle. The higher your risk tolerance, the more you can afford to lose (but the greater the potential gains, often). Many brokerages ask about this when you sign up, but you can also take a risk tolerance quiz before choosing one.

2. Research micro-investing platforms

Before choosing any investment platform, learn about the fees it charges and micro-investment options it offers. Some great micro-investing apps to consider include:

Acorns: Spare-change investing with round-up transfers from your debit card, credit card, or bank account.¹ Important Risk Disclosure Acorns Invest is an individual investment account which invests in a portfolio of ETFs (exchange-traded funds) recommended to customers based on their responses to the Acorns investor profile questionnaire. Spare change invested with Round-Ups® is transferred from your linked funding source (checking account) to your Acorns Invest account when activated. Round-Up investments from an external account will be processed when your Pending Round-Ups reach or exceed $5. Investing involves risk, including loss of principal. Please consider, among other important factors, your investment objectives, risk tolerance and Acorns’ pricing before investing. Investment advisory services offered by Acorns Advisers, LLC (Acorns), an SEC-registered investment advisor. Brokerage services are provided to clients of Acorns by Acorns Securities, LLC, an SEC-registered broker-dealer and member <a href="https://www.finra.org/#/">FINRA</a>/<a href="https://www.sipc.org/">SIPC</a>. For additional important risks, disclosures and information, please visit <a href="https://www.acorns.com/terms/">https://www.acorns.com/terms/</a>.
Betterment: Robo-advisor with fractional shares of ETFs.
Public: Social investing platform with fractional shares of stocks and ETFs.² All investing involves risk. Brokerage services for US listed securities, options and bonds in a self-directed brokerage account are offered by Public Investing, member FINRA & SIPC. (not investment advice).US members only. ³ Offers are subject to change at any time in Public Investing’s sole discretion.The amount of money you get when you transfer your brokerage account to Public.com is dependent on how much you transfer. Transfer offer is subject to full terms and conditions of <a href="https://public.com/disclosures/brokerage-bonus-offer">Public Brokerage.</a> This is a paid endorsement. Not investment advice. All investing involves risk of loss. Self-directed brokerage accounts on Public.com that offer brokerage services for US Listed and registered securities offered by Open To The Public Investing (Public Investing), member FINRA & SIPC.
Robinhood: Commission-free stock trading with fractional shares and individual stocks.⁴ Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of the Robinhood Customer Agreement. All investments involve risk and loss of principal is possible. Robinhood Financial LLC (member SIPC), is a registered broker dealer. ⁵ All investments involve risk including loss of principal. Interest is earned on uninvested cash swept from your brokerage account to program banks. Robinhood is not a bank. For margin enabled customers, to earn interest through the cash sweep program, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest.
Stash: Robo-advisor with fractional shares, plus a debit card that earns ETF shares.⁶ Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. Investing involves risk and investments may lose value. Holdings and performance are hypothetical. Stash Banking services provided by Stride Bank, N.A., Member FDIC. The Stash Stock-Back® Debit Mastercard® is issued by Stride Bank pursuant to license from Mastercard International. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Any earned stock rewards will be held in your Stash Invest account. Investment products and services provided by Stash Investments LLC, not Stride Bank, and are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value. In order for a user to be eligible for a Stash banking account, they must also have opened a taxable brokerage account on Stash. ⁷ For a complete list of fees please see the <a href="https://cdn.stash.com/disclosures/stride-deposit-account-agreement.pdf" target="_blank" rel="noopener noreferrer">Deposit Account Agreement</a> for details. ⁸ To note, SIPC coverage does not insure against the potential loss of market value. For details please see <a href="https://www.sipc.org/" target="_blank" rel="noopener noreferrer">www.sipc.org</a>.

3. Set up transfers

Investing your spare change is a common way to micro-invest, and it’s perfect if you don’t know how much money you want to put in yet or don’t feel like you can afford to do much. However, it does mean linking a spending account or card and having less control over how often you invest. I’d suggest starting with regular investments — maybe adding a recurring transfer every time you get paid — and seeing how that feels before enrolling in automatic round-ups.

4. Choose your investments

Depending on the platform, you’ll have different assets and styles to choose from. Acorns, for instance, offers only passive investing with ETF portfolios, while Robinhood allows for more active investing with whole stocks.

5. Invest what you can afford

Whatever you do, don’t stretch your budget to invest. If you can’t afford to invest one month, it may be better not to invest than to put bills on a credit card with a high APR. If you have to sell investments to make ends meet, you may lock in losses and lose money.

Pros and cons of micro-investing OR do’s and don'ts

Here are some of the advantages and disadvantages of micro-investing compared to other forms of investing.

Pros

Can work with any risk tolerance: Depending on your appetite for risk, you may want to invest aggressively or conservatively. Micro-investing generally accommodates both approaches, as well as those somewhere in between. Many platforms have curated ETF portfolios you can choose according to your needs and goals.
Easy to start: It only takes a few minutes to sign up for a micro-investing account and start investing. This approach is more beginner-friendly and hands-off than advanced types of investing like day trading or purchasing whole stocks.
Low commitment: You can adjust the amount you micro-invest whenever you want to, and you aren’t required to stay locked into round-ups.

Cons

Limited asset classes: The asset world is not your oyster with micro-investing. You’ll typically be limited to stocks and ETFs, though some platforms may also give you access to other classes like crypto and mutual funds. Still, you won’t have as many options when you micro-invest as you might by trading in larger amounts of money.
Fees: Although many commission-free trading platforms offer micro-investing, you may still pay subscription, brokerage, or trading fees.
Not designed for the long term: I don’t recommend only micro-investing forever, and it shouldn’t replace saving for retirement. Investing small amounts in only stocks and ETFs isn’t likely to translate to the serious, steady returns required for a nest egg.

Warning

Never invest money you can’t afford to lose. Investing in any asset can result in gains or losses in the short- and long-term, and you’re not guaranteed to grow or even get back what you put in. Do your best to diversify your investments for the best chance of growth, and remember not to pull funds right away if things start to go south (I know how tempting this is).

FAQs

Can you make money micro-investing?

Investments will continue to increase and decrease in price whether you invest using small or large sums of money. That means investors that invest $1 should receive the same percentage gain as investors that invest $1,000 in the same investment, without accounting for fees that may be associated with particular investments.

Can you invest with $100?

You can definitely invest with $100. Many brokerage platforms have low or no investment minimums. For example, you can start investing with Stash or SoFi Invest® with as little as $1. Some even include sign-up offers for free stock or shares when you join, so you may be able to stretch your investment further.

Bottom line

Micro-Investing allows you to start investing in the stock market even if you have little money to set aside. The best brokerage accounts and apps often have no minimum initial investment requirements and offer fractional share and/or round-up investing to make investing less scary and more accessible. Even if it’s not much, the money you set aside can grow to a decent sum, especially if you increase the amount you invest over time and stick with it.