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Best Micro-Investing Apps In Canada
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You don’t build wealth just by earning an income and budgeting – that’s not enough. Investing helps you build the value of your assets over time. If you have big financial goals like retiring before 60, paying for your children’s college tuition, starting a business, or even buying a house, your surest way to reach those goals is by investing early.
Luckily, you have many options. Types of investments include:
- Exchange-traded funds (ETFs)
- Guaranteed-Investment Certificates (GICs)
- Mutual funds
What Is Micro-Investing?
Most Canadians invest their money, but an increasing number of Canadians (47%) prefer to keep savings in cash. This is especially true for the younger generation, as opposed to older generations. Reasons for not investing include lack of financial knowledge and literacy, as well as the misconception that you need to have a lot of money to invest. In fact, 42% of people who don’t invest believe they don’t have enough money to invest.
While larger investment amounts usually yield larger returns, that doesn’t mean you can’t benefit at all from small investments. Micro-investing is simply investing in small amounts. It’s an investment method that’s accessible to everyone, no matter what their economic background is. You can make investments as small as $5 through micro-investing.
Check out our beginner’s guide to investing.
How Does Micro-Investing Work?
A common way to start micro-investing is by rounding up your transactions to the nearest dollar and investing the difference. For example, if you purchase a sandwich for $9.25, round that up to $10 and invest that 75 cents. Do this with multiple purchases to put a more sizable amount for investment together (i.e. $5 instead of 75 cents).
The idea is to invest an amount that’s small enough not to impact your day-to-day budgeting. You won’t need to say no to certain outings or greatly alter your lifestyle.
You can do the math and put aside these micro-investment amounts yourself; or, you can download an app to help you do it.
Best Micro-Investing Apps In Canada
There are a couple of micro-investing platforms that do the rounding and investment work for you. These apps usually charge a small fee and help you adjust your micro-investment amounts and goals with minimal work needed from you.
Launched in 2017 originally as Mylo, Moka is an app that automatically invests your spare change by rounding up your purchases. People who invest with Moka don’t need a large investment or financial knowledge to invest. Their constant development has given rise to new products to help reduce expenses, help pay your debts and offer cashback rewards.
Benefits Of Moka
Low fees: Moka only charges $3 per month. However, make sure you’re investing enough money to make that $3 count. For example, if you’re only investing $10 per month, you’re paying a 33% management fee to Moka, which is quite high.
Secure platform: Moka is safe and has comparable security with any mutual fund you invest in with a bank. However, note that the company itself isn’t CIPF-insured.
Low minimum investment: You can invest as little as $5 with Moka.
Diverse investment options: You can choose from various investments, including tax-free savings accounts (TFSAs), Registered Retirement Savings Plans (RRSPs), and even socially responsible investments.
- Moka Perks help you find savings with specific partner purchases, such as Uber Eats, Hello Fresh, and more. Moka 360 offers double perks that give you double the cashback to help you find more savings.
- Automatic Portfolio Rebalancing, to help you set up recurring deposits as well as rounded up transactions.
WealthSimple is an investment platform catering to millennials and other younger generations. Their service has minimal fees and an intuitive platform that helps people invest, manage taxes, and even purchase cryptocurrency. Their Roundup feature rounds up your purchase to the next dollar and invests it for you.
Benefits Of Wealthsimple
Low fees: WealthSimple charges a small management fee of 0.4-0.5% per year, which makes it an especially ideal app choice for people investing truly small amounts.
Many investing options: WealthSimple Trade lets users invest in the stock market. They also offer socially responsible investing, and traditional investment accounts like RRSPs, TFSAs, RESPs, RRIFs, and Business accounts.
Secure: WealthSimple is insured by the CIPF. This means that your investments are insured if WealthSimple goes bankrupt. They also use bank-level encryption and two-factor authentication to verify accounts.
Extra features: WealthSimple offers financial advice, automatic rebalancing, dividend reinvestment, and access to other services like Wealthsimple Trade.
Cost Of Micro-Investing
Micro-investing apps charge any or all of the following fees:
- Brokerage fees: The cost for each transaction or investment
- Management fees: The ongoing monthly or annual fee to keep the account open. For example, Moka has a monthly fee of $3, while WealthSimple takes an annual percentage rate fee of 0.5%.
- Additional fees: Some apps might have charges for opening or cancelling an account, making a withdrawal, and for other actions. Make sure you check the fine print to learn about any hidden fees.
Is Micro-Investing Right For You?
Micro-investing is best suited for people that can’t invest a lot of money from their current budget. It’s also great for younger people who benefit from the extra time in building up their investment over time. Finally, micro-investing is great for people with little financial knowledge that want to try their hand at investing without putting so much money at risk.
What are the requirements to open a micro-investing account?
Which app lets you buy fractional shares in Canada?
Are there alternative options to micro-investing?
Micro-investing is a great way for people to start small with investing. Although small amounts don’t yield returns as large as bigger investments, they still add up! Consider using WealthSimple or Moka to get your feet wet with investing in a convenient, low-effort way.
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