Micro-investing — the act of saving small amounts of money regularly — appears to be the latest trend in the investing world.
With a trusted investing app, an individual can round up their purchases to the dollar, tucking away the extra change into an investing account.
Millennials, who in general are not saving enough for the future, are embracing micro-investing, explains Lex Sokolin, global director Fintech Strategy at Autonomous Research.
It's a way to make investing manageable for young people on low incomes or with few assets, he said.
"Micro-investing is not for millionaires figuring out what alternative they're trying to put their money into," Sokolin said. "It's much more for the regular investor who just wants to take control of their life and improve it a little bit."
Micro-investing apps offer the user the opportunity to save and invest money in small amounts. For example, when you connect a debit card, a micro-investing app can round up your purchases to the dollar or make automatic transfers for you.
"Micro-investing right now is the preferred solution for millennials," Sokolin said. "When you have just a little bit of money that you want to put away and you want it to be automated and easy, you just download a mobile app, set it, and it does these things for you."
It's a set-it-and-forget-it approach, he said. For example, Acorns, a popular micro-investing app, takes the change in your transactions and puts it into savings, Sokolin said.
"It does this automatically so you don't have the homework of having to move money, having to figure out what to do with it," he said. "What the micro-investing apps have done really well is reduce the friction of having to interact with the technology."