We get asked this question — All. The. Time.
Our young investors often wonder if there is any real merit in investing small amounts or if micro-investing is of any value at all. We are here to clear the air once and for all — investing any amount, big or small, is a valuable endeavor. And the sooner you start, the better it is in the long run. And look, we’ll be honest with you — micro-investing alone is not a sustainable financial plan. It is a small part of what is (hopefully) a bigger and more diverse portfolio. But it can be a useful stepping stone to bigger and smarter investments.
So let’s delve into it a bit more, shall we?
What is Micro-Investing?
Let’s start with the most important question — what is micro-investing?
Micro-investing is the foundation on which the Deciml App was developed. It is the concept of investing small amounts of money consistently over a long period of time to earn a compounding interest over time. Unlike most investments, micro-investments do not require you to save money and invest large lump sums at once.
One of the easiest ways to micro-invest is through round-up investing — wherein the spare change from your online transactions gets invested in a fund of your choice.
Here’s an example of how it works as part of your daily routine:
Say you ordered wraps for lunch and paid the bill amount of ₹295 via your UPI app or your card. Once your online payment has been completed — a round-up investment app such as Deciml will pick up this spent amount, round it up to the next 10 and invest the difference. So in the case of your lunch — Deciml will round up the spent amount of ₹295 to the next 10 which is ₹300 and invest your spare change of ₹5.
Exactly. It’s that simple!
If you think about how many online transactions you make in a day — from taking that auto to work, to getting a midday snack — it becomes easy to see how many investments you are capable of making in a day and that when invested regularly, small amounts can turn into substantial investments over time.
What is the scope of micro-investing?
What can you do with your hard-earned money?
You can put it in a savings account — that’s smart! But it means your money is just lying in your account, not really working for you. You can start setting aside some money to make a one-time lump-sum investment — that’s great! But then by the time the saved amount reaches a substantial level, it’s already lost some amount of value.
Micro-investing is therefore a great alternative that grants you the ability to start using your money to make more money, right here right now. Once you learn more and earn more, your investment journey won’t solely rely on investing spare change. Ideally, with time and more earnings, you will be able to make bigger and more frequent investments. But, micro-investing tackles the “when is the right time to start investing” conundrum and lets you get to it, instantly.
What are some of the other ways in which micro-investing can help you create a robust portfolio?
1.Facilitates Diversification — Ask any successful investor — what is the key to creating a successful financial profile? — they will tell you it is diversification. There are more than a few apps (including Deciml) which give you a range of investment options. There is a huge scope for diversification with micro-investing, depending on the apps and options you choose. So, do your research, pick your options wisely, and use micro-investing to create a varied portfolio bringing in varying levels of returns on your investments.
2. Immediate Interests — What happens if you start saving ₹10 in your savings account every day? Honestly — not much. The interest earned on savings is negligible unless it is for huge sums of money. But micro-investing ₹10 will start earning you a daily, tangible interest. It is the best option to fully experience the benefits of compounding interest from day 1.
3. Automated Investing — On Deciml, you have an option to select your Round-Up Limit, and your Daily Deposit Limit. Once you set these limits, your investments are carried out on autopilot. And believe us when we say, it is an awesome feeling when you check in on your investments and interest at a random time and see the growth in both in a matter of days!
4. Every Rupee is an Investment — Look. Being consistent with large sums of investments is tough. We know. We’ve been there! But what about your spare change? No amount of investment is too small to start micro-investing. We know we say this a lot, but we are really trying to drive the point home. Want to invest just ₹10 a day? No problem. Want to invest even less? Still not an issue. Want to invest only your spare change? We’re on board! The only thing we are not okay with is not investing at all — because micro-investing can and does bring returns on every rupee you invest!
Micro-investing takes away the pressure of having to save up big lump sums for investments. You can start with as little as you want and can grow your investments as you yourself grow. Why would you want to put off investing till your 40s, when you can start in your 20s, and reap substantial rewards by the time you’re 40? It’s just bad math!
So, to come back to the original question — is there any point in just investing ₹10-₹20? — yes. There absolutely is, and you should start now!