There’s a lot of exasperation and eye-rolling directed at the millennial generation these days: they’re not saving enough for the future, they’re not taking their finances seriously, they’re spending too much money, it goes on and on.
There is some truth to this – but it’s not just the millennials that are finding investment out of reach. Young people and low-income earners alike often find investing difficult to understand, hard to get started, and even just plain boring. It can also be very expensive to get started, which means these people often miss out on the opportunity to invest.
A new concept combining micro-investment (investing very small sums of money at a time) and technology has recently caught the interest of tech-savvy but cash-poor would-be investors. Apps like Acorns, Stash, and Clink aim to get investors rounding up their small purchases such as coffees or petrol – money they would be spending anyway – and putting that pocket change into a range of app-manageable investments. The names are cute, and the apps are marketed primarily to young people, but the idea is an interesting one. The investment options are diverse, with some apps allowing you to choose your risk level ranging from conservative, which puts most into cash and bonds, through to aggressive which can have over 80% allocated to equities. There are some associated fees, and usually a deposit is required, but it’s still substantially less than a traditional broker would charge for services.
The remarkable thing about this idea is that some people, who would ordinarily not have bothered to get involved, are developing an interest in investment markets. Some investors can be intimidated and put-off investing by the idea that you have to start with a large sum of cash to get going, but this is not necessarily the case. If anything, these micro-investments can set the groundwork for a lifetime of good money management habits.