Micro-investing is a modern investment strategy that has quickly grown among new investors and gen z. Micro-investing like the literal definition means a small sum of money invested in either shares, digital gold, mutual funds or exchange-traded funds (ETFs). Most investors use these small investments to build up a portfolio on a limited budget.
Banks have for a very long time been trying to attract more Indian's to their investment products that also include but are not limited to mutual funds. But they have not been very successful as investment and savings are done by very few. While some are hesitant as they lack the financial knowledge others feel that the financial systems are too complicated to understand.
However, the recent trends show that more and more people are now willing to invest. According to the Consumer Spending Outlook 2022 report, nearly 40 per cent of the population in India are currently investing in mutual funds and equities. You add to this the growing tech usage in the banking sector and the advent of the UPI, investing has become easier and more interesting for the new investors.
With the same goal of making investment easier and to make 'spending the new investing' Ronit Harisingani founded Spare8, a platform to automate investments and create a daily savings habit.
The Mumbai-based company allows its users to purchase gold in small investments that are as low as Rs 1 and offer real time market updates, daily rewards system and user-based offers. The company also prides itself for being one of the quickest on-boarding processes that was deployed by the fintech startup by utilizing the UPI 2.0 stack.
According to the CEO of Spare8, less than 3 per cent of Indians have any kind of structured investment strategy and this is despite the increased use of UPI. He believes that the only way to close this gap is to turn investment into an accidental habit and then integrate it with expenditure.
But one wonders how a micro-investing app helps you save money?
Well for starters, you can set a fixed amount that can be as low as Rs 10 or as high as Rs 10,000 and these apps will make regular and equal-sized purchases rather than huge or sporadic ones. This will enable first-time investors to buy an asset at any price and maximize returns over the long term.
By making it easier for users to learn about investing, track their investments, and make informed decisions, apps like Spare8, help encourage financial literacy and education. In the long-term, this can assist consumers in developing their financial security and knowledge.
Adding on to these benefits Ronit said, "By facilitating small investors' access to the financial markets, investing apps in general can contribute to democratizing prospects. For those who might not have had access to conventional investing options or the capacity to invest greater sums of money, this can help level the playing field."
Additionally these apps also offer incentives to attract the young Indians and increase their financial discipline. The apps also make use of the latest technology and social media. Speaking on how Spare8 uses technology to attract youngsters Harisingani said,"The programme has functions like social sharing and gamification that can make saving more entertaining and participatory."
Technology is a major contributor for increased micro-investing in India
Ronit also believes that technology is a major contributor for the increased micro-investing in India. He said, "Micro investment platforms have made it easier than ever for consumers to invest their money in small sums because of the increasing usage of smartphones and the internet. Micro Investing is now more inexpensive because of technological improvements that have reduced transaction and fee expenses."
Giving an example, the founder of the Mumbai-based startup said, "With platforms like Digio and services like UPI 2.0, getting started has also been a breeze. By allowing investors to deposit up to INR 1,80,000 in Digital Gold without completing KYC, the user experience is greatly improved."
With the help of technology users can also easily set up accounts, complete transactions and monitor their investments all on the same platform.
Challenges for micro-investing apps
Talking about the difficulties of being in the business, the founder of Spare8 said, "One of the most difficult challenges for players in the micro-investing and digital gold space in India is establishing customer trust. Many Indians are still hesitant to invest their money online, so it is critical for businesses to establish themselves as reliable and trustworthy partners for their customers."
But looking at the growing global economic uncertainty and inflation concerns Spare8 believes that more people will be interested in investing in gold. They believe that the demand for gold as a safe-haven asset will continue to grow in the future.