You know that feeling you get when you find money in your pocket that you didn't know was there! Microfinancing can have the same effect in an electronic capacity. It is money you don't notice, doing smart things while you're not watching.

What is it?

Much like the name suggests, it starts with small amounts of money – anything from $0.10-$50 – as opposed to more traditional larger investment lumps. Users can regularly invest these small amounts in a selected asset class such as real estate or shares and slowly turn a few cents into something more substantial. The processes are simple and do not require users to be market savvy.

How does it work?

Generally, it operates via an app on your phone or mobile device. There are two that attract a large following:

Raiz (formerly Acorn): Users link a debit card to the app and round up small transactions to the nearest dollar. The rounded amount is then pooled in a managed fund. Users choose the risk level. For example, the user purchases a coffee for $4.70 and $0.30 is invested in the pool. Once the user sets it up, the rest happens automatically. The idea is to save and invest without noticing the cost.

Brickx: This app allows users to buy a “brick” in an investment property. Each property is broken up into 10,000 bricks and everyone owns a section. The brick price is dependent on the housing market and how much is borrowed. Loan repayments and management fees are taken out and everyone gets a return on their rental income.

Who gets involved?

Apps for microfinancing are good for those who want to invest small amounts in order to reach a larger goal down the track. For some, it might be a holiday or school fees, for others it might be about getting a larger sum together for further investment in the real estate or share market.

Important information: This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non‑guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count Wealth Accountants® is the business name of Count. Count advisers are authorised representatives of Count. Information in this document is based on both current and proposed regulatory requirements and laws as at 3 April 2019, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document. Count is registered with the Tax Practitioners Board as a Registered Tax (Financial) Adviser. However your authorised representative may not be a Registered Tax Agent. Consequently, tax considerations are general in nature and do not include an assessment of your overall tax position. You should seek tax advice from a Registered Tax Agent.

Michael James, Accountant Robson Partners