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What Is Micro Investing, And How You Can Start In Malaysia

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Due to the rising cost of living, Malaysians are always on the lookout for new ways to bolster their income. Some turn to e-commerce and selling products on social media, while others participate in the gig economy with services likeGrab and FoodPanda.

During this time, a significant number of Malaysians have also turned to investments as a form of supplementary income. But since the financial demands of traditional investments can be quite large, a lot of them turned to micro investments.

What Is Micro Investing?

First things first, let’s talk about what micro investing is. 

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It’s simple. Micro investing is actually just like normal investing, only done on a much smaller scale. Instead of using a large amount of money as the collateral, micro investing is done with smaller amounts of money. As an example, Stashaway doesn’t require any minimum balance in your account for you to start investing.

This means that you can even invest with amounts as small as RM5.00.

Why Is Micro Investing Rising In Popularity?

With a starting amount as small as that, a lot of Malaysians can start dabbling in investing without much risk. And that explains why it’s rising in popularity in the world, and even among Malaysians.

But is micro investing really a good option to supplement your income? To answer that question, let’s look at the pros and cons of micro investing.

Pros of Micro Investing

Little To No Startup Cost

If you ask anyone why they’re not looking at investment as a form of supplementary income, chances are most of them will answer that it’s too expensive to get started. 

And honestly, they’re right. For traditional forms of investing, the initial deposit itself can cost a lot. For example, if you want to start investing using MyTHEO’s Robo Advisor, the minimum initial investment amount is set at RM100. This then becomes a major hurdle for your average salaryman who is just looking to start experimenting with investing.

However, the low initial deposit offered by micro investment platforms reduce this challenge into something more manageable.

Very Little Risk

Along with having low entry costs, micro investing also allows for low risk investing for their user. However, it should be noted that there is no such thing as risk free investment. Micro investors are still subject to the same market forces as everyone else and could potentially make a loss. The only difference is that the size of the investment in this case limits the amount that can be lost.

Flexibility

Another benefit of micro investing is its flexibility. 

Once you’ve started getting your ball rolling and your funds have started growing, you can choose to make bigger investments if you want. This makes micro investing the perfect start for your investments to grow, and you can always move on to bigger things when you feel the need to do so.

But although micro investing does come with a lot of benefits, that doesn’t mean that there are no drawbacks whatsoever to micro investing.

So for this next section, let’s have a look at the cons of micro investing.

Cons Of Micro Investing

Small Returns

Due to the small amounts of investments one typically makes in a micro investing platform, that usually also means that the returns one gets from micro investing are minimal as well.

The limited returns make micro investing less effective for long term financial goals like retirement savings or wealth accumulation.

Now that we’ve discussed the pros and cons of micro investing, for those who are interested and believe that micro investing is perfect and exactly what you need right now, let’s have a look at how can you start micro investing in Malaysia

How To Start Micro Investing In Malaysia

For Malaysians who want to start delving into the world of micro investing, first things first is you need to find a platform that fits you. In Malaysia in particular, there are a bunch of micro investing platforms that are suitable for all walks of prospective investors, depending on what you need. There are a number of robo advisors, which are automated investment platforms that help you automatically create and balance a portfolio. Taking a lot of the hard work out of getting started. They are designed for micro investors in mind, and offer low start up costs with minimal fees.

Micro Investing Is A Perfect First Foray Into Investing

Micro investing is suitable for people who want to start investing, but can’t really afford to risk too much and the minimal entry requirements allows you to get a feel of investing at minimal costs.

As the old adage goes, ‘never invest what you can’t afford to lose’.