What are micro-investments? How does micro-investing work?

An account from F-Empowered Founder:

I’ve had allot of people ask about investing, now whilst I can’t give any personal advice, my general advice would be to never invest in anything you do not understand.

What I’d love to do though, is share what I have recently done with my money and why.

I have recently set up a direct debit of $10 per week plus round ups into a FirstStep micro-investment account. There are others, like Raiz (AKA Acorns) which are great too. Why? Well, savings account interest rates are so low and I wanted to have a play with investments without breaking the bank.

A micro-investment account gives me access to an exchange traded fund (ETF) in line with my risk profile (balanced!) and allows me to deposit a small amount into it (which it does automatically) each week. They charge a fee of 0.275% on the investment balance subject or $1.25 per month (whichever is greater).

An ETF takes a ‘basket’ of different investments and packages it up into one solution . Some of the products are riskier than others (means not guaranteed to get your money back) and there are therefore three baskets to cater for those that are conservative or risk averse (Defensive), those that have a moderate risk profile (Balanced) and those that are OK with risk (Growth).

As far as investments go, bonds, for example are less risky than shares, and cash (e.g. savings) is less risky than bonds. Packaging up all these different products into one solution is called diversification and all the best investors know not to put all your eggs in one basket.

A bond is a loan you are giving to a company or government in exchange for them paying you a set amount of interest…A share is you owning part of a company, if the market thinks a company is performing above expectations – it’s share price rises and the inverse is also true.

So I’ve chosen a portfolio of medium risk and medium return – which contains hundreds of shares and bonds in my one investment of $10 per week.

The other part which is really cool is called Roundups. This rounds up my purchases putting the difference into my investment account. So, let’s say I buy a coffee for $3.80, the $0.20 will go straight into my investment account. I can set the roundup settings I want.

I’ve been doing this for seven weeks, $10 per week, with $85.61 in my account right now… I’ve set a savings goal and will watch how my investment performs.

So key points:

  • Micro investment accounts are an ‘easy’ way to get introduced to the world of investing without breaking the bank (and for me has been a great alternative to a savings
  • Diversification (don’t put all your eggs in one basket) is critical in any investment decision
  • Risk and return are proportional. the greater the risk, the greater the potential return, and the greater the risk.
  • Don’t invest in anything you don’t understand and own your own decisions 🙂

Interview with FirstStep co-founders Shiraj De Silva and Matthew Fish

What inspired you to start FirstStep?

FirstStep was inspired by the realisation that many young people in Australia weren’t actively investing in their financial future. We found that this was due to high minimum investment amounts (upwards of $5,000), lack of knowledge around what to invest in, high fees and tedious paper applications and forms. We dug deeper into the funds management industry and we found that fund managers were incredibly inefficient, with heavy administration costs, a lot of manual work (which result in high minimums) and legacy systems, and financial advisors didn’t want to deal with young people unless they had up to $30,000 to invest.
We set out to build FirstStep to allow young investors to start investing with as little as $1, and to focus on continuous smaller contributions over the longer time. We wanted to focus on user experience through a free mobile app, which includes a 5-minute signup process (no more paper applications and certified identify documents!), while charging as little as $1.25 per month.

What is micro-investing?

Micro-investing is the idea of investing small amounts regularly. This involves a low minimum investment amount, i.e the amount you need to get started and then a way to invest small amounts regularly, like $5 a week or fortnight. Micro investing platforms like FirstStep aims to reduce/remove the barriers of traditional investing, like brokerage
minimums ($500) or managed fund minimums ($5,000+). Micro-investment platforms like FirstStep aim to enable more investors to start investing earlier but with smaller amounts.
A commonly used element of micro-investing is the use of roundups. This is the idea of rounding up your everyday transactions to the nearest dollar and investing the ‘loose change’. For example, if you purchase a coffee for $4.50, we round up the transaction to the nearest dollar, $5, and invest $0.50.

What is your general advice when it comes to investing?


  1. Start investing as soon as you can. The key is ‘time in the market’ and letting compounding work for you.
  2.  Start small but try and get your investment balance over $1,500 to reduce the impact of fees
  3. Spend less than you earn and invest the rest
  4. Don’t keep all your funds in high-interest savings accounts (HISA). Shares have historically returned more than real estate over 30 years
  5.  Invest small amounts regularly by setting a recurring contribution and make use of dollar cost averaging
  6.  Diversify your investments
  7. Pick the lowest cost investment option(s)
  8.  Be patient


  1. Don’t try to ‘time’ the market
  2. Don’t let emotion rule investing, i.e. don’t buy in times of ecstasy and euphoria, especially when markets are at all-time highs
  3. Don’t interrupt compounding, i.e. don’t sell when markets are down / crashing