A Guide to Micro-Investing Apps For Beginners

Thanks to micro-investing platforms, the world of investment is open to all. Canstar reveals the lowdown on micro-investing apps in New Zealand.

The convenience of apps

Traditionally, to get started buying stocks and shares, you’ve had to use a broker and invest large sums. Micro-investing apps aim to remove those barriers, to encourage people to invest whatever their incomes and assets.

Micro-investing apps are easy and convenient to use. Setting up an account takes a few minutes, and from there you can view your investment options and track your portfolio. Plus, micro-investing users can start with as little as a dollar (although bear in mind there can be a fee to sign up to the app).

Given the current low-rate environment, micro-investing offers the potential to earn more than putting your money in a savings account.

Compare savings accounts for free with Canstar!

How it works

Micro-investing apps predominantly invest in shares, exchange traded funds (ETFs) and managed funds. To get you started, most apps pair you with an investment portfolio based on your risk tolerance.  

If you don’t speak finance …

  • Shares: When you buy shares, you invest in a particular company, like Tesla or Facebook. Shares can be bought or sold between people on an exchange, which is a market where people can trade shares.
  • Exchange traded funds: ETFs are a group of different assets rather than one particular company, but they trade like shares on an exchange. Think of it in terms of a bakery. Buying individual buns is like buying shares. You pay the price for each different kind of bun. An ETF is like buying a box of buns, you get all the different types, which can be grouped by a theme.
  • Managed funds: These work a bit like ETFs, except they don’t trade on an exchange. There’s a person behind the fund doing the calculations. You can buy them directly from the fund provider or through an investment app. 

What micro-investing apps are on offer in NZ?

 

Hatch

Hatch looks outside New Zealand to US markets. You can invest in over 2900 companies and 900+ ETFs that are listed on the US share markets. There’s no minimum investment, you can invest as little or as much as you like.

Membership costs:

  • Opening an account with Hatch is free
  • Exchange fee: 0.5%
  • A one-off US$1.50 USD fee and annual US$0.50 USD fee pays for your compulsory US tax filing obligations
  • To buy or sell 0-300 shares: US$3 per trade
  • To buy or sell 301+ shares in one trade: US$0.01 per share

Sharesies

Sharesies allows you to buy shares and ETFs on the NZ stock exchange, and US companies and ETFs listed across the NASDAQ, NYSE and CBOE. You can also invest in NZ manged funds. 

Membership costs:

Sharesies charges two membership plans:

  • Monthly: the price is based on your portfolio value: $50 or less = free | $50-$3000 = $1.50 | $3000+ = $3 
  • Annually: Sharesies is $30 annually for portfolio values over $50 (best value if portfolio over $3000 for a year)

Sharesies transaction fees:

  • 0.5% for orders up to $3000
  • 0.1% for orders above $3000

Sharesies exchange fee: 0.4%

There’s also a management fee built into the price of ETFs and managed funds, charged by the fund manager. 

ShareMeUp

ShareMeUp allows you to invest in selected NZX-listed shares from a minimum of $50. You choose your recurring investment period (weekly, fortnightly or monthly) and the companies you’d like to invest in. They do the rest. 

Membership costs:

  • No monthly fees charged – ShareMeUp only charges a fee when you purchase investments
  • A minimum brokerage fee of 99c is charged per trade, which is based on the minimum purchase of $50. The fee is capped at 1.98% of the investment amount, equivalent to the fee on a $100 trade.
  • ShareMeUp charges a fixed transaction fee of $1, plus a variable fee of 0.1% of the amount invested (e.g. 5c for each $50 invested)

Stake

Stake offers Kiwis the opportunity to invest in over 3800+ US stocks and ETFs. Stake’s US trading platform is 100% commission free, with no charge for your trades.

Membership costs:

  • No fee for basic membership
  • Commission free trades
  • 1% FX transfer fee
  • 0.5% express funding fee, only if you want to get your money by the next trading session
  • $5 for your W-8BEN US tax form

What are the risks?

If you’re looking to start small and potentially ease yourself into investing, then micro-investing is an option. It can give you a good feel for investing without playing with large sums of money. But investment values can go up and down like a yo-yo. Remember, there’s no guarantee on your investments – the fund or company’s performance can always change. 

Also, be sure to take into consideration any fees, because they can quickly add up.

They don’t work for everyone

Micro-investing apps don’t suit all investors. If you’re already confident in investing, you may be disappointed with the returns on these apps. Engaging with a fund manager or picking your own stocks or ETFs could result in better returns. Micro-investing also does require a long time-frame in order to build up any significant wealth. So, if you’re not in it for the long game, it may not build the funds you’d hope for. 

KiwiSaver

If you’re serious about investment and are looking for long-term returns, KiwiSaver is a great way to invest in your future, and to access investment know-how from industry professionals. To read more about Canstar’s expert KiwiSaver ratings and our 2020 KiwiSaver Scheme Provider Award click this link. Or to compare KiwiSaver providers, click on the button below.

Compare KiwiSaver providers for free with Canstar!

Enjoy reading this article?

Sign up to receive more news like this straight to your inbox.

By subscribing you agree to the Canstar Privacy Policy

Share this article