Micro-investing and bonds might seem like they belong in completely different corners of the investing landscape – and they kind of do.

One helps you invest spare change with a few taps on your phone. The other involves lending money to earn interest over time. But both are valid forms of investing and serve different purposes.

You don’t have to choose one or the other. But if you’re weighing them up, it helps to know how they compare. In this article, we’ll walk through the basics, differences, and how each might fit into a long-term investment plan.

What is micro-investing?

Micro-investing lets you start investing small, with just a few dollars. No need for a big lump sum or fancy setup. And most platforms do the heavy lifting for you. Just set up your account, pick a portfolio, and you’re good to go.

Some apps offer round-ups. Spending $3.50 on coffee? They’ll round it to $4 and invest the extra 50 cents for you. You can also buy fractional shares to own a slice of a company’s stock without paying for the whole thing.

Micro-investing is about making investing easy and automatic. You don’t have to time the market or place every trade yourself.

Most platforms invest your money in investments like managed funds which track indexes. Micro-investing doesn’t suit everyone, but it can be a simple way to start and build good investing habits.

For more insights, check out our blog article: What is micro-investing ?

What are bonds?

Bonds are a type of investment where you lend money to a government or company. In return, you get regular interest payments. They also have an end date, known as the maturity date – that’s when you get your original money back, if all goes to plan.

You can buy bonds through a broker or as part of a managed fund or ETF (i.e. bond ETF ). Some micro-investing apps also include them.

There are different types – like government, corporate, and real estate bonds. Each comes with its own level of risk and return.

Bonds are generally considered lower risk than shares. But that usually means lower returns too. Some investors use bonds to reduce the ups and downs in their portfolios as they tend to hold steady when shares drop.

That said, bonds aren’t risk-free. The value can still fall if interest rates rise or the borrower can’t repay the loan.

How do risk and returns compare?

Micro-investing and bonds sit on different ends of the risk–return spectrum. One typically taps into shares and the other is a fixed-income option. Here's how they stack up:

Feature	Micro-investing	Bonds
Risk level	Varies depending on assets (usually higher)	Lower, especially government bonds
Returns	Can be higher, especially with equities	Lower, but more stable
Volatility	Can rise and fall with markets	More predictable, but not risk-free
Liquidity	High (can sell anytime through the app)	Depends on the type; some are harder to exit
Inflation impact	May outpace inflation over time	Inflation can reduce real returns

Risk isn’t always a bad thing. It just means your investments can go up or down in value based on various factors, like company performance or market movements. But overall, bonds tend to be relatively steadier.

Micro-investing often includes shares. So your investments can move more with market changes because prices depend on supply and demand, company performance, and investor sentiment. This may lead to higher growth or bigger dips.

As we’ve said, bonds usually offer lower returns. But for some, that trade-off can be worth it for the reduced volatility. Returns also depend on timeframes. Over the short term, bonds might hold steady. Over the long term, shares have historically delivered more growth. That said, past performance isn’t a reliable indicator of future returns.

Neither option guarantees returns. Like any investment, both carry risks – just know what type of risk you’re comfortable with.

What about fees, access and tax?

Micro-investing and bonds don’t just differ in how they work—they also come with different costs, tax rules and levels of control.

Fees

Micro-investing apps charge one of two ways:

• A flat monthly fee (e.g. $2 per month)
• A percentage of your account balance

Some also charge transaction or withdrawal fees, depending on the app. These costs can feel small, but if you're only investing a little, they may take a noticeable slice of your returns.

Bonds don’t usually come with ongoing fees – especially if you buy them directly. But that doesn’t make them fee-free:

• You might pay brokerage to buy or sell them
• If you invest through a managed fund or ETF, management fees may apply

Access and control

With micro-investing, you can usually sell your investments any time through the app. It’s flexible and relatively quick.

However, not all platforms give you direct ownership. As mentioned, some are CHESS-sponsored , so your name is on the investment. Others use custodial models – so the platform holds the investments on your behalf.

Bonds can be more restrictive:

• Some must be held until they mature (which could be years away)
• Others are tradable but may be harder to sell without taking a loss
• If interest rates go up, the market value of existing bonds may fall

So while bonds may feel lower-risk, they’re not always easier to exit.

Tax

The tax side also works differently.

• Micro-investing often involves capital gains. If you sell for more than you paid, you may owe capital gains tax .
• Bonds usually pay regular interest. The tax payable is part of your income at your marginal rate. There’s no discount for holding them long term.

Tax might not drive your decision, but it’s worth keeping in mind – especially if you plan to invest consistently or in larger amounts later on. You might also want to speak with a qualified tax adviser to better understand the tax implications of each investment type.

In short, costs, access and tax rules can all influence how well an investment performs. Even small differences can matter over time.

How do micro-investing and bonds fit into a portfolio?

Micro-investing and bonds have different strengths, but both can be part of a well-diversified portfolio , depending on your goals.

Micro-investing: building exposure over time

Micro-investing platforms make it easy to gradually grow your investments. By rounding up purchases or setting small deposits, you can build a portfolio without needing a large sum upfront.

For example, if you round up $1 per transaction and make 50 purchases a month, you’d invest $50 without even noticing. Over a year, that’s $600 – before factoring in any potential returns.

As we’ve said, most micro-investing platforms often focus on managed funds which track indexes, so your returns will depend on market movements. Some portfolios also include bonds, offering a mix of growth and stability.

Bonds: steady returns with less movement

Bonds are often used for stability. They pay regular interest and generally don’t move as much as shares.

For instance, a government bond might pay 3% interest per year. If you invest $10,000, you’d earn $300 annually – without needing to sell.

However, bonds can still lose value if interest rates rise or if the issuer struggles to repay. They also don’t usually offer the same long-term growth as shares.

Combining both

Some investors use micro-investing for shares and ETFs while holding bonds separately to add stability to their portfolios. Others may prefer one over the other.

For example, someone saving for a home deposit in a few years might prefer bonds for steadier returns. Meanwhile, a long-term investor might focus on shares, accepting short-term ups and downs for higher potential growth.

Which option suits you?

Choosing between micro-investing and bonds comes down to your investment objectives, risk comfort, and how you prefer to invest.

Micro-investing might suit you if:

• You want to gradually build your portfolio wealth without needing a large upfront amount.
• You prefer an easy, automated way to invest small amounts over time.
• You’re comfortable with market movements in exchange for higher potential returns.
• You want exposure to markets with the option to withdraw anytime.

Bonds might suit you if:

• You prefer steadier returns and lower risk compared to shares.
• You’re happy earning regular interest rather than relying on share price movements.
• You want an investment that moves less during market downturns.
• You don’t mind locking your money away for a set period in exchange for predictable returns.

A mix of both – or neither?

As touched on earlier, you can include both micro-investing and bonds in your portfolio to get the best of both investments. Or, there’s also the option of neither. You might prefer other asset classes, like direct shares, property , term deposits, or cash savings , depending on their needs.

There’s no single right answer. The best choice is the one that aligns with your financial goals and risk tolerance .

Investing is personal: find what suits you

There’s no shortage of ways to invest, but knowing how each one works puts you in control.

Micro-investing gives you an easy way to start. Bonds offer more predictable returns. Neither is better or worse – just different. What matters is understanding how each option lines up with your goals, your comfort with risk, and your plans for the future.

You don’t need to rush your decision. But the sooner you get clear on what suits you, the sooner you can start building towards it. Take the time to explore, ask questions, and choose what feels right.