Micro-investing is a type of investment strategy that allows individuals to invest small amounts of money regularly over time. [1]
Micro-investing is designed to make investing more accessible and affordable, especially for those who may not have a lot of money to invest or who are new to investing. [2]
The idea of micro-investing has been popularized and made more accessible through the rise of financial technology (fintech) companies such as Stash, [3] Robinhood and Acorns. [4] These companies have made it possible for individuals to invest even small amounts of money regularly. [5]
The goal of the technology is to help people invest small amounts of money easily, regularly, and affordably with the intent of democratizing access to financial services & products that have historically only been available to the wealthy. This Fintech innovation allows many micro-investing platform users to invest very small amounts of money, such as a few cents or dollars, and these small investments can accumulate over time to build up a larger portfolio. [6]
Investment is traditionally defined as the "commitment of resources to achieve later benefits". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broader viewpoint, an investment can be defined as "to tailor the pattern of expenditure and receipt of resources to optimise the desirable patterns of these flows". When expenditures and receipts are defined in terms of money, then the net monetary receipt in a time period is termed cash flow, while money received in a series of several time periods is termed cash flow stream.
In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics and strategies appropriate. Some choices involve a tradeoff between risk and return. Most investors fall somewhere in between, accepting some risk for the expectation of higher returns.
LendingClub is a financial services company headquartered in San Francisco, California. It was the first peer-to-peer lender to register its offerings as securities with the Securities and Exchange Commission (SEC), and to offer loan trading on a secondary market. At its height, LendingClub was the world's largest peer-to-peer lending platform. The company reported that $15.98 billion in loans had been originated through its platform up to December 31, 2015.
Financial inclusion is the availability and equality of opportunities to access financial services. It refers to processes by which individuals and businesses can access appropriate, affordable, and timely financial products and services—which include banking, loan, equity, and insurance products. It provides paths to enhance inclusiveness in economic growth by enabling the unbanked population to access the means for savings, investment, and insurance towards improving household income and reducing income inequality.
JPMorgan Chase is an American multinational banking corporation with a large presence in the United Kingdom. The corporation's European subsidiaries J.P. Morgan Europe Limited, J.P. Morgan International Bank Limited and J.P. Morgan Securities plc are headquartered in London.
SoFi Technologies, Inc. is an American personal finance and financial technology company. Founded in 2011 at Stanford University, it operates as a direct bank and supports other financial institutions through its technology platform. As of 2024, SoFi reports 9.4 million customers and 160 million platform accounts.
Fundrise is a Washington, D.C.–based financial technology company founded in 2010 that operates an online investment platform. Fundrise has been labeled as the first company to successfully crowdfund investment into the real estate market.
"Fintech", a clipped compound of "financial technology", refers to the application of innovative technologies to products and services in the financial industry. This broad term encompasses a wide array of technological advancements in financial services, including mobile banking, online lending platforms, digital payment systems, robo-advisors, and blockchain-based applications such as cryptocurrencies. Fintech companies include both startups and established technology and financial firms that aim to improve, complement, or replace traditional financial services.
Revolut Group Holdings Ltd, doing business as Revolut, is a British multinational neobank and fintech company that offers banking services for individuals and businesses. The company was founded in July 2015 by British-Russian businessman Nikolay Storonsky and British-Ukrainian software engineer Vlad Yatsenko and operates in 48+ countries.
Tandem Money is a company that owns Tandem Bank, one of the UK's original challenger banks. Tandem Bank is a digital bank with a mobile app, and no branches.
Financial technology is an industry composed of companies that use technology to offer financial services. These companies operate in insurance, asset management and payment, and numerous other industries. FinTech has emerged as a relatively new industry in India in the past few years. The Indian market has witnessed massive investments in various sectors adopting FinTech, which has been driven partly by the robust and effective government reforms that are pushing the country towards a digital economy. It has also been aided by the growing internet and smartphone penetration, leading to the adoption of digital technologies and the rise of FinTech in the country
Wealthsimple Inc. is a Canadian online investment management service. The firm was founded in September 2014 by Michael Katchen, Brett Huneycutt, Som Seif, and Rudy Adler and is based in Toronto. As of September 18, 2024, the firm holds over C$50 billion in assets under management. It is primarily owned by Power Corporation indirectly at 55.1% through investments made through their holdings in Power Financial, IGM Financial and Portag3.
Social media in the financial services sector refers to the use of social media by the financial services sector to promote and distribute financial services. Social media is used in various aspects of the financial industry including customer service, marketing, and product development. It has enabled financial institutions to extend their reach through direct and real-time communication with customers, fostering more personal connections. It also allows individuals to talk to other individuals creating lending and trading via social groups as well as developing new financial services by fintech startup companies.
RealCadre LLC, commonly Cadre, is an American financial technology company that provides individuals and institutions direct access to real estate investment properties, including commercial properties based in New York. The business and financial press describe it as a platform that "makes the real estate market more like the stock market" by allowing investors to select the individual transactions in which they participate, while investing a smaller amount than would be required to fully fund a transaction. For example, 12 institutional investors participated in a $60 million office building purchase. The firm was named to Forbes' "FinTech50" for 7 years in a row starting in 2016. In 2019, Cadre was the cover story of the Forbes "FinTech 50" issue. In 2018, a partnership with Goldman Sachs was announced through which Goldman Sachs' private wealth clients committed at least $250 million (USD) real estate investments through Cadre. In 2020, Cadre announced its "Direct Access" fund intended to include smaller investors with a $400 million target raise. The company also offers a managed portfolio service and a real estate secondary market, as well as a cash holdings account called "Cadre Cash". The company has announced plans to address racial injustice in the United States by investing at least 10% of its Direct Access fund investments with minority-owned operators and increasing its cash held in black-owned banks.
Stash Financial, Inc., or Stash, is an American financial technology and financial services company based in New York, NY. The company operates both a web platform and mobile apps, allowing users to incrementally invest small amounts, commonly known as micro-investing. It also provides robo advice.
Raiz Invest Limited is an Australian financial technology company operating in Australia, Indonesia and Malaysia. It is listed on the Australian Securities Exchange (ASX:RZI). It allows Australian customers to micro-invest. the remaining round up of everyday purchases in exchange traded funds.
M1 Finance is an American financial services company that offers a robo-advisory investment platform with brokerage accounts, digital checking accounts, and lines of credit. M1 offers an electronic trading platform for the trade of financial assets including common stocks, preferred stocks, fractional-share ownership, and exchange-traded funds. It also provides margin lending, automatic rebalancing services, automatic dividend reinvestment services, and cash management services including debit cards.
Acorns is an American financial technology and financial services company. Based in Irvine, California, Acorns specializes in micro-investing and robo advice.
BUX is a European mobile brokerage company, based in Amsterdam and London. Retail investors buy shares, ETFs and cryptocurrency through the BUX app. BUX allows users CFD trading through its Stryk app and crypto trading using the BUX Crypto platform.
Linqto is a San Francisco Bay Area-based investment platform that allows accredited investors to invest in private-market startups and pre-IPO companies. It has users in 110 countries. As of 2024, the company is set to go public on the NASDAQ.