If you’re starting your financial journey, you might be wondering where to put your spare cash. Should you save it or invest it ? Both options can help build wealth, but they serve different purposes.

Micro-investing lets you invest small amounts regularly, often rounding up spare change from everyday spending. It’s a simple way to start investing without needing a large upfront deposit. A savings account, meanwhile, keeps your money secure and earns interest. It can be useful for short-term goals and emergency funds.

Neither option is better than the other – it depends on your goals. Some people prefer to save first, then invest. Others micro-invest right away. Many combine both.

This article breaks down the key differences to help you decide what makes sense for you.

What is micro-investing, and how does it work?

Micro-investing makes it easier to start investing using small amounts of money. Instead of saving up a large lump sum, you invest a little at a time – often automatically.

Many micro-investing platforms round up your everyday purchases and invest the spare change . Others let you set up regular contributions, so you're consistently investing in the background.

Most micro-investing platforms focus on managed funds which track diversified investments, like exchange-traded funds (ETFs) . This means your money is spread across different assets rather than going into a single stock .

That said, investing always carries risks. The value of your portfolio can go up and down, unlike a savings account where your balance is relatively stable (if you don’t touch it!). Micro-investing is often seen as a long-term strategy, so it may not suit you if you need quick access to your money.

What is a savings account, and how does it compare?

A savings account can keep your money safe while earning interest. It’s relatively simple, low-risk, and gives you quick access to your funds.

Many banks offer automatic round-ups, where spare change from purchases moves into savings. This works similarly to micro-investing, but without market exposure.

A savings account can help with short-term goals like building an emergency fund , covering unexpected costs, or saving for a major purchase. Unlike investing, your balance doesn’t fluctuate, making it a fairly stable place to store money.

Interest rates on savings accounts vary, but they’re often lower than long-term investment returns . Some accounts offer bonus interest if you meet certain conditions, like regular deposits or limited withdrawals.

A key difference between saving and investing is risk and growth potential. Savings accounts provide steady, predictable returns but may not keep pace with inflation over time.

You might choose to focus on saving alone or look for ways to grow your money beyond interest earnings. This is where micro-investing can enter.

Channel small amounts into micro-investing

Some investors prefer to start small and invest regularly rather than waiting to save a lump sum. Micro-investing can make this possible by automating contributions. This can help you build wealth in the background.

This approach may suit people who:

• Want to invest but haven’t reached the $500 minimum for CHESS-sponsored shares.
• Prefer a low-cost, hands-off way to start investing.
• Like the idea of investing in the background without needing to track individual stocks.

Potential benefits

✔ Builds an investment portfolio over time, without requiring large upfront contributions.
✔ Provides market exposure, which has historically outpaced savings account returns over the long term.
✔ Encourages consistent investing habits through automation .

Potential drawbacks

✘ Market fluctuations mean returns aren’t guaranteed.
✘ Some platforms charge fees that may impact small balances, so it’s worth checking the cost structure.

Channel small amounts into a savings account

For some people, building up savings before investing makes more sense. As mentioned, a savings account provides potential stability, accessibility, and a relatively predictable return.

This approach may suit people who:

• Want to build an emergency fund before taking on investment risk.
• Are saving for a short-term goal , like a car or a home deposit .
• Prefer lower-risk options , where their money isn’t affected by market ups and downs.

Potential benefits

✔ Money is secure and easy to access when needed.
✔ Predictable interest earnings make it easier to plan for short-term goals.
✔ Minimal risk of losing money due to market downturns.

Potential drawbacks

✘ Interest rates may not keep up with inflation, reducing purchasing power over time.
✘ Growth is generally slower than investing, which may impact long-term wealth-building.

Save first, then invest in CHESS-sponsored shares

Some investors prefer to save up first before entering the share market. This approach allows them to invest in CHESS-sponsored shares for direct ownership and long-term control.

This approach may suit people who:

• Want to buy shares directly rather than through a micro-investing platform.
• Prefer CHESS-sponsored investing but can’t meet the $500 minimum investment per trade yet.
• Like the idea of reducing trading fees by saving up and investing in larger amounts.

Potential benefits

✔ Allows for CHESS-sponsored ownership, so you hold shares directly in your name.
✔ Helps avoid micro-investing fees, which may reduce returns on small balances.
✔ Can make investing more intentional, since larger trades mean fewer transactions.

Potential drawbacks

✘ Delays market exposure, so you may miss out on potential investment growth while saving.
✘ Requires discipline to save consistently, rather than spending the money elsewhere.

As mentioned, you might use this method as a structured way to enter the market. You might also mix saving and investing, allocating funds to both strategies based on your financial goals.

How do you decide which approach is right for you?

It’s normal to feel unsure about where to put your money. You might want to invest, but also feel the need for security. Maybe you’re saving for something specific, or just trying to build good financial habits .

Whatever your situation, the right approach depends on what feels sustainable and makes sense for your goals. Here are some questions to help you decide:

1. What’s your goal? Do you need money soon, or are you thinking long-term?
2. How soon will you need access to your funds? Investing usually suits long-term goals, while savings accounts offer quick access.
3. How comfortable are you with risk? Are you okay with market fluctuations, or do you prefer predictable growth?
4. Do you have an emergency fund? If not, a savings buffer might be a priority before investing.
5. Are you motivated by small, steady progress? Micro-investing helps you start now, while saving first lets you invest in bigger amounts later.
6. Do you want control over individual investments? CHESS-sponsored shares offer direct ownership , while micro-investing provides lower-cost access.
7. Do you need a mix of savings and investments? Some people prefer to separate short-term savings from long-term investments.
8. Are you unsure about investing at all? If so, it might help to focus on other financial goals first and revisit investing when you’re more confident.

You might even choose to do neither right now , if your focus is on paying off debt or improving financial stability. There’s no rush – the best choice is one that works for your situation today and gives you confidence moving forward.

Your money, your decision

There’s no single right way to manage your money. What matters is choosing an approach that aligns with your goals and feels sustainable.

Micro-investing can help you start investing sooner with small amounts, while a savings account can potentially keep your money secure and accessible. You could focus on one, use both, and or wait until you’re financially ready.

You’re in control. Whether you save, invest, or do neither for now, the key is making a decision that works for you today – and adjusting as your needs evolve.