Buy Coffee, Invest in a Mutual Fund

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Published on November 16, 2021 by

The trend of micro-investing is taking the finance world by storm as more Millennials and Gen Zs are adopting this method of investing.

Micro investing is slowly becoming a popular trend among young investors who are looking for easy and feasible methods of saving money.

Apps in this space such as Spenny, Zeffo, and Roundups are witnessing a high rate of downloads on the app store. Spenny, since its inception in 2019, has seen more than one lakh downloads on the app store, with around Rs. 12 lakh being invested through the app. Zeffo and Roundups have had 10,000 and 5,000 downloads each since their inception in August 2021 and January 2021 respectively.

Micro investing is a form of investing in which the investor passively invests small amounts of money into security or mutual fund based on expert recommendation. “The app that provides this service is linked with the investor’s debit/credit card or UPI. Every time he/she swipes their card or pays through UPI, the app rounds off the amount to the nearest tens or hundreds based on the preference set by the investor, and collects it into a fund called “Roundup.” This roundup fund is then invested into a security or a mutual fund based on the risk and return preference set by the investor,” said Rukmini Sengupta, Business and Product Head at Zeffo, a micro-investing platform.

For example, if you spend Rs. 270 on a coffee at Starbucks, the app will debit Rs. 300 from your bank account and invest the Rs. 30 into a mutual fund based on expert recommendations. This means every time you pay digitally for a meal, conveyance, or shopping, a roundup amount automatically gets invested into a mutual fund.

“It’s been great. I have saved around 3,000-4,000 rupees which have been invested. I am currently getting a 12% return,” said Abhinav Rajyakirti, who is a micro investor.

“I had initially planned to invest a certain part of my income into the stock market on a monthly basis. But since it doesn’t happen automatically, I used to miss the date I had set and wasn’t able to save much. I didn’t have the time and energy to pick out the stocks I wanted to invest in.” said Khush Bavishi, another micro investor. According to him, micro-investing is convenient because it is passive and requires almost zero effort.

Business experts are optimistic about the growth of this trend. Prof. Shankar Prasad, Professor of Business at Jain University, Bangalore, said, “Who doesn’t want fast returns? This is one of the best ways to get fast returns.” Commenting on the safety of these apps, he said, “When you want higher returns, you have to take higher risks, which the youth is ready to do. So micro-investing is here to stay.”

An industrial psychologist, Kushangi Mayekar said that micro-investing is appealing to investors as it gives returns without having to make any effort on the investors’ part. When you don’t have to make an effort for something, it automatically becomes more attractive.

Micro investing is becoming the new cryptocurrency in terms of the pace at which its popularity is growing. Fledgling investors are loving the trend, and more investors are adopting this method of investing.

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