The trend of micro-investing has captured the attention of younger generations, becoming a captivating topic across social media platforms. This approach encourages individuals to save significant amounts by setting aside just a few pounds each week.

Micro-investing is straightforward—commit to investing small amounts regularly. With the advent of user-friendly online banking apps, transferring a steady stream of savings into investment accounts has never been more convenient.

According to the Investment Association, by 2026, 40% of Generation Z (individuals born from 1997 to 2012) and 30% of millennials (born between 1981 and 1996) are contemplating regular investment practices.

In the UK, one in every five adults plans to start regularly investing amounts ranging from £10 to £50 this year.

Historically, investing was often associated with the affluent or those possessing a sizeable initial sum. However, this outdated view is swiftly evolving.

We’ve analyzed the data to reveal how quickly your investment can grow when you consistently allocate small amounts to the stock market.

By setting aside as little as £2 each working day – or £10 a week – and leaving it to grow, you could amass £10,000 in only 12 years.

If you increase your micro investments to £3.85 each working day (the price of a Tesco Meal Deal for those with a Clubcard), you could hit this target in eight years.

So what’s the best way to set up regular savings and where should you invest your money when you’re getting started? Here is everything you need to know about joining the micro-investing wave.

RISK-RATED FUNDS FOR BOTH THE BOLD AND TIMID

It is easier than ever to reward yourself for making a packed lunch instead of buying a supermarket sandwich – by putting your savings into an investment account thanks to new micro-investing platforms that are integrated with your bank account.

App-based banks such as Monzo and Zopa have cornered the market, as they offer the chance to invest tiny amounts through an app whenever you feel like it.

Finance app Plum goes one better – it uses artificial intelligence to decide when you can afford to invest, and how much, by analysing your bank balance and spending habits using Open Banking, which links your current accounts into the app.

Micro-investing brands tend to look very different to traditional stocks-and-share trading platforms, which can at first glance be daunting and complicated for new investors. They are also one step removed from familiar online investment platforms such as AJ Bell, Hargreaves Lansdown and BestInvest. This is because they’re often part of your existing banking app, or can be linked to it.

One example of this is Monzo, which allows you to invest as little as £1 at a time, making it perfect for those who want to ‘swap’ a saving they’re making, such as a daily coffee or a sandwich, for an extra addition to their investment pot.

Each tiny investment you make buys a small slice of a fund investing in a number of different companies and assets.

The funds you choose promise that they’re ‘risk rated’ too – so that timid investors get less of a rollercoaster ride than those who accept volatility for the possibility of a greater reward.

Zopa, another app-only bank popular with younger people, offers a similar deal. With only two funds to choose from, ‘Balanced’ or ‘Bold’, new investors aren’t faced with complex decisions as they would be with a larger fund supermarket.

Rajan Lakhani, head of money at Plum, says that micro-investing is a great tool for those who are nervous and don’t know how to get started.

He says: ‘Investing for the first time can feel scary. It’s not typically an instant-reward game, there’s a lot of complex lingo thrown around, and it’s daunting knowing that the value of your investments could go up and down over their lifecycle.

‘Regularly investing just small amounts of money allows you to dip your toe into the investing waters and build up your confidence, while keeping the risk level relatively low.’

GAIN CONFIDENCE BY DRIP-FEEDING CASH

Neil Bage, founder of Neurofi Behavioural Intelligence, a company that looks at the way our minds work when we deal with money, says that by using the apps investors get a little ‘dopamine hit’ when they drop as little as £5 – conditioning them to want to keep investing.

But there’s more to it than that, he adds, with micro-investing being the first step to becoming an investor of far bigger sums – your new investment habit will feel natural, not forced.

‘The real win isn’t financial – it’s identity,’ he explains. ‘When investing becomes a frequent habit rather than a scary one-off decision, people start to see themselves as investors. And that shift in self-concept tends to stick.

‘That’s the real power of micro-investing that nobody talks about.

‘Psychologists call it identity-based behaviour change –when you ascribe a label to yourself, you act in ways that are consistent with that label.’

HOW MUCH CAN YOU MAKE THIS WAY?

Although it is often seen as a stepping stone, it is possible to amass significant sums by micro-investing – it just depends on how much and how regularly you are willing to set aside money.

Laura Suter, head of personal finance at AJ Bell, calculates that if you swapped your £3.85 Tesco Meal Deal every weekday for a £19.25-a-week investment into an individual savings account (Isa), you’d have £10,000 in just eight years.

That is assuming your investments grew at 7 per cent a year – an assumption often used for higher-risk funds.

If you put the money into a decent savings account instead, paying 3.31 per cent, it would take an extra 12 months to hit that £10,000 figure.

But it’s over longer time periods that the merits of investing your money – rather than leaving it in a cash savings account – really become apparent.

After 13 years setting £19.25 a week aside, an investor could have £20,000 – it would take a cash saver a further three years to hit that target.

Similarly, if you gave up just £10 a week – the cost of a takeaway pizza – and put that money in your investment pot, Jason Hollands at BestInvest calculates you’d have more than £10,000 in 11 years.

However, investing can be a bumpy journey, and the value of your pot can go down as well as up, which can be disheartening for new investors.

Hollands says that a gradual approach, such as a weekly £10, can help with this because it ‘keeps you going even when the headlines about the state of the world are gloomy, and it also helps smooth out some of the short-term ups and downs that are an inherent feature of financial markets’.

Most sites now make it easy to open an Isa or pension to hold your micro-investments, so you’re not paying tax as your money grows.

WATCH OUT FOR FEES THAT TAKE A BIG BITE

While micro-investing can get you started and help you build a pot of money, there are some downsides to these beginner-friendly sites.

Apps that offer this functionality often have only a limited number of funds and investment options, which may not suit everyone and can be expensive, charging high fees.

Some may charge extra to put your money in tax-free accounts, such as Isas and pensions.

Monzo uses funds from BlackRock, with three ready-made risk-rated funds or a small list of exchange-traded funds allowing people to invest in entire markets or trends such as tech, automation and robotics.

Zopa offers just two funds, managed by Invesco. Plum offers more choice, but only those signing up to one of its paid plans can access a stocks and shares Isa, which allows your money to grow tax free.

Charges and taxes may look like a small percentage of your investment, but they add up over time. Typically, micro-investment providers charge more than some other players.

Monzo has just reduced the charges on its investments from 0.45 per cent of investments for those on its free plan to 0.25 per cent. On top of that you’ll pay 0.14 per cent for the BlackRock funds it offers, and various amounts for the exchange-traded funds on the site.

The most expensive of these is the Global Clean Energy ETF, which has a 0.65 per cent fee on top of the platform fee.

Zopa charges 0.4 per cent in platform fees and a further 0.14 per cent for the funds it offers – a total of 0.54 per cent.

With Plum you’ll pay £2.99 a month to access the higher tiers where you can buy a stocks and shares Isa, as well as a 0.45 per cent management fee and the charges for the funds themselves, from 0.13 per cent upwards.

You’d typically pay less with other fund supermarkets, particularly if you had a bigger investment pot.

Dodl charges just 0.15 per cent in fees for its Isas, and is currently fee-free for the first year. It requires a minimum investment of £25 per month for regular contributions via direct debit. The minimum you can pay as a one-off, lump-sum investment is £100.

Over five years, assuming 5 per cent growth, someone with £10,000 in a Dodl fund would have £220 more than someone with the same growth in the Monzo version, due to the smaller charges. InvestEngine, which offers exchange-traded funds, doesn’t charge a fee at all, and the funds available on its site have fees as low as 0.03 per cent for funds that simply track the US stock market.

InvestEngine requires a minimum initial investment of £100, and you can make regular top ups of £10 and up.

Andrew Prosser, head of investments at InvestEngine, says two people investing £1,000 each month over 20 years, achieving the same returns of 5 per cent per year, could end up with a difference of more than £43,000 in today’s money – purely because one paid 1 per cent in fees and the other paid none.

‘Fees should always be front of mind,’ he adds.

TRY STARTING SMALL, THEN BRANCHING OUT

Newer micro-investment apps typically offer little choice when it comes to funds, though Monzo has several tracker options.

When you’re starting out, these funds offer a mix of bonds, equities and other assets that are related to a particular risk appetite, with those who are willing to take on more risk often having more money in stocks.

As your investment pot grows bigger, though, you’ll need to think about whether you’ve ended up with too many eggs in one fund basket, or whether you need to spread your investments wider.

Zopa allows you to invest in only one of its funds at a time at the moment, so you’d have to be very confident that it is a good home for all your money.

Lakhani, at Plum, says that it’s good to start out with a global exchange-traded fund (ETF), which has the advantage of being cheap but also diversified. These track a basket of stocks so your money mirrors the growth of global stock markets.

He adds: ‘A good starter option for those setting out to invest would be a global ETF such as the Invesco FTSE All-World ETF because it gives exposure to more than 4,000 companies across

50 countries, helping to spread risk while tracking the broader global economy.

‘As confidence grows, investors can branch out into regional funds focused on the US, Europe or Asia, or consider thematic ETFs centred on trends like AI, renewables and blockchain.

‘These approaches can add growth potential, but they also concentrate risk, so they should usually sit alongside a wider, well-diversified portfolio.’

THINK LONG-TERM… AND STAY PATIENT

There’s one final danger with micro-investing – it might be too easy to keep track of your pot.

Bage, at Neurofi, says the real problem of having your investments at your fingertips is that it starts to look like a short-term home for your money.

‘When investing lives inside your banking app, alongside your Spotify and Costa Coffee app, it starts to feel like the same category of thing – low stakes, reversible, consequence-free.

‘That’s psychologically comforting, but it can create a distorted sense of what investing actually is.

‘Markets reward patience above almost everything else, and if your reference point is an app that gives you a little dopamine hit every time you drop in £5, you’re not being conditioned for patience, you’re being conditioned for activity. Those are very different things.’

Your vision needs to be long-term if you’re going to make micro investing work for you. But a £5 investment this week could be the start of a long and successful investment career.

Go on, take a packed lunch to work – and watch your Isa grow.