Why is Gen Z drawn to microinvestment apps?

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Low brokerage fees, easy-to-use applications and small investments are the main factors that push the use of micro-investment applications

Low brokerage fees, easy-to-use applications and small investments are the main factors that push the use of micro-investment applications

Devashish Motawani, 28, an entrepreneur based in Lucknow, uses an investment app to protect his financial future. He has nothing but praise for the Upstox app for the ease of investing it gives him.

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“I’m at an age where I want to make investments, long and short term, and apps like Upstox make it easier for me to follow the market without having to spend hours gathering information on where I should invest,” Motawani said. .

Millennials and Generation Z can choose from a variety of options for investing in stocks for both long-term and short-term gains. While some people are putting their money into cryptocurrencies, others are focusing on stock investing, now made easier by micro-investing apps.

Zerodha, Paytm Money and Kuvera apps allow people to micro-invest. And their breed has gained popularity in the market through endless streams of advertisements, including from social media influencers. Digitization, coupled with ease of use and ease of access, has propelled the use of app-based investing among the nation’s youth.

Aman Agarwal, 27, a young professional based in Noida, uses apps to invest in stocks. “The ease of use, simple user interface and low brokerage costs” led him to use micro-investment applications.

Apart from the usability aspect, Motawani highlights the functionality of the app which encourages small investments. This allows him to ensure that his lifestyle is not affected by the amount he decides to invest.

Speaking of his experience, Agarwal says, “Zerodha offers complementary tools to their platform that make analysis easier. They also have a learning platform called Varsity, which actually converted me into a customer. »

For Lagan Gupta, a 25-year-old gaming industry professional, Zerodha’s regular interface updates make it difficult for users to find transaction history. “Other better options are available, but I started using this app because of its low brokerage and now I’m too lazy to switch. Besides, it’s changing regularly so it’s fine,” he says.

Other users have complained about bugs in the stock trading platform. iOS App Store reviews for [email protected] have users complaining about the lack of transparency regarding fees. Users have also complained about slow responses to complaints resulting from bugs in the app and services provided. Some have even complained about slow updates of stock price changes. Upstox app users have similar complaints about the app.

Both apps have good ratings on the Android Play Store with an average overall rating of 4.2. Upstox has over 5 million downloads with 118,000 reviews, while [email protected] has 284,000 reviews with over 10 million downloads.

“The reviews are not really representative of what is happening, any money-related app faces similar issues,” Zerodha said. The Hindu in a report.

The statement also pointed out that because people have money at stake, even small issues that may not be due to Zerodha’s interface are often blamed on the app as it is the point of contact for consumers.

The rise of micro-investment

Micro-investing is simply investing small sums, sometimes as low as ₹10, with the aim of ensuring that users continue to invest without taking major risks affecting their lifestyle. The reason why micro-investing has become a rage among young people is quite easy to understand.

Users we spoke to highlighted how easy new-age fintech apps like Appreciate, Jar, and Niyo allow them to track their spending and ensure they invest the rest of their spending.

Say, for example, you spend ₹99 for a cup of coffee, the remaining ₹1 is often ignored. However, these apps keep track of this loose change and prompt the user to invest this change when it reaches ₹100. Thus, users can track their expenses while investing for long-term benefits.

Other apps like Smallcase, while taking a different approach to attracting users, have a strong presence. Smallcase offers users the ability to connect to curated portfolios managed by investment professionals. However, their appeal to users lies in their ability to invest small amounts over long periods of time.

According to the Consumer Spending Outlook 2022 report, about 40% of the nation’s population is likely to invest in stocks and mutual funds. Now see this through the prism of Scripbox data. It says 81 lakh investor accounts were added in 2020-2021 in the country, with mutual fund city’s assets under management seeing a surge. This indicates a change in people’s willingness to invest. This desire is therefore one of the key factors that motivate the user base of investment applications.

Zerodha, one of the most popular micro-investing apps, currently has an active user base of over six million users. While micro-investing apps have been able to increase their users exponentially, the role played by social media influencers in promoting these apps cannot be ignored.

While some people are influenced by YouTube creators to invest, other young investors, like Agarwal, say they typically rely on articles and commentary from authors who write about finance. “To do my own study, I use platforms like Tickertape and Screener,” he added.

Investment app initiatives are also becoming a source of information for people, both to learn about the stock market and what areas they can invest in. As in the case of Zerodha, Varsity, an educational app described as a collection of stock quotes with in-depth coverage and illustrations, presents information in the form of byte-sized cards to appeal to young audiences.

So, as micro-investing apps continue to grow, their future prospects look even brighter with users like Aman saying their “experience over the years has been great. I learned a lot, which I can certainly attribute to the services offered by these micro-investment apps. I would definitely recommend them to my peers.”

Opportunity and risk go hand in hand

The risks associated with online investing without prior research are a recipe for disaster. In 2021, according to reports, Delhi Police Cyber ​​Cell department arrested 11 people for defrauding more than 5 lakh individuals using Android apps promising lucrative investment opportunities.

The apps in question, Power Bank and EZPlan can be downloaded using their APK files. However, to make matters worse for consumers, the Power Bank app was also available on the Google Play Store and was trending before it was taken down, adding to the damage it caused.

In another case, according to a PTI report, Mumbai police arrested five people who allegedly had access to the demat accounts of clients of a stock brokerage firm. The accused allegedly stole ₹3.5 crore. The plaintiffs said the defendant gained access to the WhatsApp number used by the firm, using it to contact clients and access OTPs and then their mobile trading apps.

Although steps such as two-factor authentication and time-limited OTPs have been implemented by online trading apps, the risks of compromised passwords and lack of safe online health behavior prevail. .

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