Hi and welcome to this week's episode of Money with Alpha. Today, I've actually taken a listener's suggestion, which I love, and I'm going to be talking about micro investing. It's funny because when this, when this person asked me, I was like, oh, have I done one on micro investing?
I'm not sure. So I don't think I've actually gone specifically just on it. So that's what we're going to cover today. So it's a, it's a bit of an information one. I do have a free guide which goes through a lot of this as well. So if you would like that, I will put the link in the show notes and you can always download that too.
But today I'm going to talk you through a lot of that and, and a little bit more too. So micro investing is something that I suggest to everybody. I think everyone should have some micro investing going on, on the side, especially if you aren't very confident as a, as a retail or just a general investor, because that way you're still getting into the market, you're still there, it's still growing.
It might not just be at a particularly big scale, but at least you're, you're giving yourself the opportunity to have some growth when it comes to your money. And, and investing is the best way and pretty much the only way to do that. So when I say micro investing, it usually means, like when you think investing, I think a lot of the time we have in our minds that it's going to be, you know, thousands of dollars and it's, you know, it's high risk and you've got to try and pick the stock that you want and, you know, you've buy at the right time and sell at the right time and you'll buy and hold.
Like there's so many things that just tend to overwhelm us when it comes to the idea of investing. And, and if you're, if you're in Australia in particular and you have superannuation, you are already an investor because your money is invested. It's just being invested by your superannuation fund.
And hopefully they're doing a good job and it's growing, obviously, you know, nobody has a crystal ball. And I remember recently when, you know, there was some stuff in the media about tariff and I looked at my super balance and it had tanked us the wrong, it was a bit too dramatic, but it had dropped quite a bit.
And I'm there just going, oh, okay, all right, now it's right back up to where it was and it hasn't even been a month. So it's, it. Things, things are changing so quickly. You know, markets go down, markets go up. Like people react that, that's the thing. There's a lot of reaction that goes with, with investing and, and that's what you, you can't let get to you.
You've got to try and just have your strategy stick to it. What's going on around you impact it. Because there's so many things that go into the investing side of it. It's not just the, the actual capital value of the share price itself. It's also the underlying value of the company not always reflected in the share price you think that it would be.
But that's logical and this isn't necessarily logical. There's still dividends at the company. They're still a functioning producing company. They're still going to be producing income, hopefully profits, and they're going to share those profits as dividends with their, their shareholders. So there's so much that goes into that. So micro investing tends to take a lot of that kind of off the table because you're not necessarily going to own an entire piece of a share.
So there's, there's a number of things. I was writing out a few notes just so that I make sure I cover all of the areas I wanted to. So what I will be covering today will be why do you want to invest in the first place? And why would micro investing potentially be a good solution for you or good option?
What time frame do you have for investing? Like how long do you want to invest your money? Do you want to be more of an active or a passive investor? And I'll go through what the difference is. We'll look at asset allocation or your portfolio, what that means. Then we'll talk about what micro investing actually is.
Look at some of the providers that are available. I'm going to be looking at this from an Australian standpoint and there will be more overseas. But this is, that's the ones I'll be covering for us. Some of them are international, so you can look at them in your region as well if you're not in Australia.
And then also how you can micro invest for kids. Because I invest in one micro investing platform and they have a subset that you can use for children. And then there's also micro investing platforms that are directed at kids as well, or youngsters. So it really. That's a, that's another aspect of it that I wanted to cover off too.
So there's, there is a bit to cover. So I hope you're comfortable. If, and like I said, if you're driving, listening to this and you don't want to write anything down, totally okay. Because most of this will be in the free guide that I'll put the link to in the show notes.
So the first one thing I wanted to cover is why always really, really important. I'm a big Simon Sinek fan. I love that book. Start with why. I've read it at least three times and it's, it's important to understand where you are in your stage of life, what your personality is, what your risk or tolerance for risk is.
And also why do you want to invest? Like, are you investing because you want to save for a house deposit? That's, that's a different kind of question. It depends how long you want to, to spend to save like you need to, to save up for that. Like do you have 10 years that you're, you're planning on saving for the house deposit?
Or you know, do you need it a little bit faster? Can you afford to ride out some, some ups and downs in the market? Like will you be okay if you see your, you know, $50,000 drop down to, to say 30,000 and you can hang on long enough till it gets back up again and then perhaps exceeds that 50 again?
So. I know, I know back in the, back in the day, you know, you, you didn't invest for putting a house deposit because you just, it was too risky and you just put it in as much as possible term deposits or high interest bank accounts, all of that. However, these days the prices of property have become so high it's sort of outstripped our ability to even save for the deposit.
And you don't want to take out too big a chunk. I know they do these like 1 1% deposits these days which, which scare me because it' too easy to, for the equity ratio to decline to the point where the bank will say we want more, we need more equity.
And that puts you in a real world bind. But that said, it's, it's really hard then to save just like squirreling money away. So sometimes you might actually have to put a portion of your, your house deposit into the share market, provided you've got enough time to write out any ups or downs.
So things like that, it's important to understand. Are you saving for your future? Are you saving for a child's future? Are you saving for education? Like what it. That you want to do? Because that will Then influence the second thing, which is your time frame. How much time frame have you got?
Like I said, if are you, you know, in your, in your 20s or 30s and you literally have 30 to 40 years that you can, you can just keep investing, investing and you can ride out ups and downs and this, this is the long haul. Or do you have maybe five to 10 years that may change the way you invest too?
Excuse me. That said, I think micro investing, because it's such small amounts, it's something you can do alongside pretty much anything. So it's, it's one of those solutions that I really feel like fills the gap. Like, I was just looking at mine the other day, gave me a little notification and said, oh, okay, we're, you know, we're going to invest this amount now and this is what your balance is.
I was like, oh, cool. I have literally done nothing at all to manage this and I have nearly $9,000 in there. It's taken me about seven years to get there, but it's just, yeah, like, it's money I would not have had. I was like, I've, I've gotten nearly $9,000 that I would not have had if I hadn't been doing the micro.
So that's why I suggest it as, as a really good way to just build some stuff up. And it's really good for children. Can you imagine my, my God, children now, they're, when they turn 18, I put their present is 500 in a micro investing account. I was like, even if you don't top that up, just don't touch it.
Just leave it there. You're 18 now. Just wait 50 years and then you'll see what it is. So it's, it's. Yeah. The benefit of compounding can be huge, especially when, when we're young. So then the time frame, like I said, is important. Active versus passive. So you may hear, I mean, you might understand what the words mean.
Like, active is to actively do something. So our work, our jobs, our businesses there, we're actively working. Even if we call it like passive income, you know, like course creators tend to use that terminology. I was like, a lot of it's not passive. They've done a ton of work to actually.
And they're continuing. Even if they haven't recorded the course again, they're still doing work to get people to pay attention and understand that it still exists, promote it. So that's, that's like you're still actively doing something. Passive is like literally doing like, for instance, that micro investing Account that I've got that is literally the, the definition of passive.
I've automated top ups. My roundups are doing its thing. All I have to do is if I get like, I think when my credit cards, the chip broke and I had to get a new credit card and I just had to, you know, or if a credit card expires, I need to update the details in there because it's linked to account so it can do roundups.
That's the only time I have to actively do anything. And it takes maybe two or three minutes every like two or three years. So I would call that very much passive. So that's. So you just have to decide, do you want to be a stock picker, do you want to do all the research and, you know, figure out which specific companies are going to be the best to invest in and take into account, you know, what the analysts are saying and what your gut set.
All, all of the things that it takes to actually, you know, buy and sell shares. That's very active. Passive is kind of when you, you buy a bundle of shares or you buy into an ETF and you just sort of hold it. So again, just figuring out where your personality fits in all of this.
It's important to know that because then you can work with it and then so what micro investing actually is. So micro investing in its purest or basic form is where you are essentially pooling funds with other investors and buying underlying assets. So just as an example, I, the platform I use is called Raise R A I Z.
They used to be called acorns. I love that. That just appealed to my, you know, squirrels storing up acorns. Anyway, they're now called rays. And you, you put in. So for instance, I think it has to get to like $11 or something like that. And it's doing roundup. So literally I've connected bank account, my credit card to it.
Anytime I make a purchase, it rounds it up. It kind of stores that money off to the side. And once enough roundups have got to, I think, I think the limit's 10 or $11, it then goes and buys like some portions of shares. So it's pooling money with all the other, you know, micro investors as well.
And then when there's enough money in there to actually buy the underlying asset, they buy it on your behalf, but you just own a portion of it. So you're not actually buying the actual asset itself. You're buying a. Access to a portion of the asset. So pooled investments are quite common.
They're often called syndicates as well. They're. They've been around in, on the north, in the Northern hemisphere, predominantly in America, for decades. There are relatively. Relatively new phenomena in Australia from a retail perspective. So when I say retail, I mean just like you know, everyday people being able to go and buy a share.
You like back in the old days, you couldn't even really go onto a trading platform and buy shares. You had to go through a broker. Then came trading platforms where we could go on, you know, like comsec for example or Bell Direct, Vanguard. You could go directly onto platforms and buy the share yourself.
You didn't have to go through a broker. The online platforms would often charge you a brokerage fee, but that was a lot smaller than the fee that you would pay to a human to go and place the trade on your behalf. So this is, this is how the technology has really evolved and made things so much easier for us to do.
So that's micro investing. You're buying like a portion or you can just go in and buy like one share. So there's different platforms and different ways to do it but essentially it's what it says, it's micro. You, you're buying small amounts, whether it's a portion of a share or a single share.
It's to allow you to access assets that you wouldn't normally be able to access if you had to go and buy it yourself. So there's pooled investments for things to get access to. You know, like for example, if you wanted to go buy an Apple share or an Amazon Share it or Google Share, Facebook, any of those, they're, they're extremely expensive.
So to go buy one would, you know, you'd have one share and there's your whole portfolio which is not that, not the ideal. So you can get access to a portion of that by buying into an index. So I won't going to go too much into the index side of things.
I want to focus more on the micro investing. But that's essentially micro investing just little amounts that you buy into like taking it. If you imagine an app, an apple but not the company, the actual edible, edible and you're just biting a chunk and that bite is the amount that you own and that's what you're paying for.
So then there's very, there's a number of providers out there. Like there's, I've just the list that I've got so raise. I've already mentioned, mentioned they're one of the only ones that allow you to do roundups which I absolutely love because I'm, you know there's so many things that you buy that a sense, you know, they might end in, you know, A lot of marketers like to do something ending in a seven.
So they're going to round it up to the nearest dollar, whether it's, you know, from 17 cents up to, you know, say it's $2.17. It'll round it up to $3. So you're still paying the provider $2.17, but the extra was that 83 cents will go to, to raise and it'll sit there until you get to the amount that it needs to actually start to do the investing itself, which is often like $10 I think.
But it's, it's really, really, really, really simple and you can then top it up. So I started doing top ups probably is it about 18 months, two years. I've, I've lost track of time now I need to go back and check when I actually started it. $10 a month.
That's literally. And it skyrocketed. Like doing top ups plus $10 a month was such a big difference. I'm almost tempted now to up it to $20 a month and see how, how things go. Cause I don't even notice it. I get this notice out of my, it's, I'm getting $10 taken in my bank account.
I was like, oh, oh, okay, cool. Right, there we go. No idea. So that's, that's raise then. And this fee is obviously involved as well. So you've got to look at this. And the fees do tend to change, so but they're not huge on a percentage basis. But it is good to have a look.
Raise is probably not one of the cheapest, but it's still pretty reasonable. There's another investing and these are all apps as well. So you have first step is another one and you can start up for like with a dollar as well. And you can set up rules for when you want to deposit and then when things sort of.
So you can kind of create your own top ups in a way. But you, yeah, but you, you can just invest as, as much or as little as you like. They have an annual fee structure. I think it starts at about 15. Then there's another platform called Perla. They offer different ways to invest.
So you can select individual stocks if you want to stock pick and you know, say somebody's like, oh, you have to invest in this particular company, then you can choose that company if you would like to. But you can also do, you know more that pooled investing, which is more that traditional micro investing where you can put in as little as $5 and then fees might start from say $1.70 a month, but they will change depending on how much you're investing too.
So. And the fee structures change all the time, so you have to still have a look at that and make sure that you're happy with it. I'm going to jump over one and cover it at the end because it's, it's more related to children. Sharesies is another one. Yeah, they give them cutesy little names as well, but you can invest in individual companies around the world as well.
And there is a brokerage fee. So that one's kind of a bit more like a traditional platform, but where you can, you might only just want to buy like one share though. Comsec, which is our Commonwealth bank online trading platform, they've also brought out Micro Invest. They've added micro investing to their, their suite.
And the minimum investment there is $50. And you can also own an underlying asset, but of course it's got to be, you know, $50 or more. And then you've, you, you own that one share and then they have a trading fee as well. I think it's, it used to be about $2 a trade.
That may have, may have changed. That's just for the micro investing, though. And there might also be other fees because if you've got a regular CommSec account, depending on what their free structure is too. So again, you've just got to check that Etoro is another one where you can buy like a piece, like a, it's a pooled investment.
You can buy a bit of a share and then. But their minimum investment amount is $25. So yeah, again, not huge, but yeah, more than a dollar, obviously. And there's, you can also buy into foreign exchange things too. So there's, there's different, different things that you can do with Etor Bamboo where it allows you to buy into crypto.
So you can do crypto micro investing as well. And fees are a little bit higher. So it's about a $50 a deposit and it can go up to $250 depending. But you can also buy gold and silver too. So if you don't, I mean the gold price is just like skyrocketed in, in the last sort of couple of years.
So rather than having to buy elves, pay was at 3,000 an ounce. I think last time I checked gold, to actually buy like one ounce, you could buy a portion of an ounce and, and pay a lot less just because you're buying less of it too. But it gives you access to that asset if you would like.
So that actually brings me to the asset allocation, which I haven't, haven't covered yet. So it's important to, to recognize what is in your portfolio and to try not to be too heavy on one asset class. I know a lot of people really focus on property. The only downside there is that you're.
Whenever the property market goes down, then all your portfolio, if it's in property, will go down. However, you can still mitigate that with, you know, you might have different types of properties. You might have houses versus units. You might be in regional areas versus main, like capital cities. So you can kind of.
Because not everything tends to go down all at once. Sometimes people like at the moment units are going up in value because a lot of people can't afford housing. So they've now gone into, into apartments and units instead, which of course is now pushing their prices up. So that's, that's one way you can do it with the property side of things.
But you can also. They're starting to do brick investing, which is like the micro investing version for property where you can literally buy a, you know, metaphorical brick in a property so you don't have to buy the whole thing, but you're like pooling your investment with others and everybody gets to buy a brick.
Or you could buy 10 bricks or however much it you would like it to be. So there's, there's platforms out there now that are, start to allow you to buy bricks, which I think is pretty cool actually. You know, if we can't do it on our own and you don't necessarily want to buy with family because sometimes that just makes it more complicated.
You can, somebody's created a platform where it's then, you know, very clearly defined what everybody's roles and what the rules are and the boundaries. And you just, you know, pull funds with a bunch of strangers with, you know, defined rules around it. So that's, that's essentially micro investing for kids in particular.
Like I said, Raise has a subset where you can create like a child account and you can invest separately for them. You can, you can invest in the same things because they also have the option of, you know, like predefined portfolios a little bit like in your superannuation. So you can, you can either just tap into that or you can choose to invest in specific shares.
And you can do that either in your own portfolio or your own account or in your child's sub account. So my daughter's still not quite old enough to do investing on her Own. So I'm doing it on her behalf and I. But I have a separate account for her so that she can watch it and track it and just see it, which is pretty cool.
But there are
platforms out there, like Spaceship has been created with children in mind. Obviously, adults can have accounts too, and quite often if a child's under 18, they can't necessarily have an account themselves, so the adult has to sort of have it on their behalf or sign up for them. But they can then, you know, be allowed to manage it and have the opportunity to use it as a bit of a sand pit in a way, to kind of test the legs at investing so that by the time they're a bit older and they're earning their own money, they have the principles behind how it works and they see what goes up and down and they see their own response to it, too.
It's important for them to understand how they respond to the ups and downs and get to know their personality when it comes to investing. And the younger you can do that, the better. So Spaceship is a really good one. So there's no fee. So, see, it's a low cost.
There are no fees or commissions for the first $5,000, but there's an annual fee that starts at about 0.05%. That used to be the way it was, so just end up having to check how that still goes. But I know a lot of people whose children use Spaceship and they really enjoy it.
So that's pretty much micro investing. I love it. I've been. I'm not normally an early adopter, but I did actually jump on this because it's so simple and it's such a great way to. To like, allow children to invest, to allow others who are not confident investors to get into the market to see how it works, to see how they work with it, and to do it with relatively low financial risk.
And also you can set it up so that you don't even really notice that it's happening, but it's there. So you can have your superannuation going, you can have your micro investing, and then once you've gotten yourself a little bit more confident in your own ability, you could start to do other investing that's a little bit bigger and sort of, you know, we start to invest like hundreds of dollars a month instead of 10 to 20.
But yeah, but it's. It's a really great. So if there's any other questions that you have that I haven't covered in relation to what micro investing is, please reach out. I can always do a supplementary episode, or I can just answer you directly so you can find me on socials, DM me and ask whatever questions.
And please submit some more ideas. I love this. You know, when I get an idea, I'm like, yay. I can do that. So, yeah, with that, enjoy the rest of your week and I will catch you again next week.
