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Micro savings apps can help turn small amounts into big savings, but can it lead to serious wealth creation?

If a penny saved is a penny earned, Jatin Bhutani earns a lot of pennies every time he spends. The Pune-based software engineer uses Deciml, a micro-saving app that rounds off his UPI payments to the next Rs.10 and puts the additional amount in a liquid fund. If a taxi fare is Rs.392, the app will round it off to Rs.400 and the additional Rs.8 will get swept into Bhutani’s investment account with Deciml.

Byte-size investing is making a space for itself, albeit small, in millennial pockets. Deciml claims to have more than 1.4 lakh active users who put away an average Rs.1,359 per month through the platform. Bhutani himself sets aside roughly Rs.1,500 a month this way. “I know it’s not a lot, but every penny counts,” says the 23-year old. Sceptics may scoff at the nano-sized opportunity such savings offer. After all, if you put away Rs.25 a day in an option that earns 5% annual returns, in three months you would have saved just Rs.2,265 (see table). Here’s where an important feature comes into play. Users can set a multiplier of up to 10x to bolster their savings. For instance, if a user chooses a 5x multiplier on all rounded-off amounts, the Rs.8 added to the cab fare will get enhanced to Rs.40. Though these micro savings may still not add up to a big sum, they can be used for short-term goals in the next 1-2 years.

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For Mumbai-based sales professional Kriti Khanduja, who uses credit cards and UPI for payments, the monthly investment is as high as Rs.5,000. “I use Spenny with a 5x multiplier for investing all my spare change. Since the amount is not too big, I don’t track the investment, nor do I plan to withdraw it in the near future,” she says. Some also don’t agree with the way the savings are invested. Rakshit Lodha, Associate Product Manager at INDMoney, says the investment options on offer in this format are limited and not high on returns. Most of these platforms only offer debt funds or digital gold as an investment avenue, which does not appeal very much to young investors.

But some apps invest as per the risk appetite of the user. For instance, Spenny offers three investment options, Turtle, Octopus and Shark, which are based on the investor’s risk-bearing capacity. Turtle invests in a liquid fund, Octopus in a balanced advantage fund, while Shark puts the money in a flexi-cap equity fund. Nema Chhaya Buch, a financial adviser and Director of Wishing Tree Financial Advisory, thinks micro-savings is a good way to nudge people, specially Gen Z, towards a savings habit.

After they see the benefits accruing from regular savings, they will be more willing to invest bigger amounts that could lead to serious wealth creation. As financial adviser Shifali Satsangee says, the idea of micro-savings and investing is good to fulfill small, short-term goals which are not heavy on the pocket, and where returns earned are not important and as a stepping stone to an investing habit. However, finally, you will need holistic financial planning and a goal-oriented approach.

Naimisha Rao, who co-founded Gullak Money, a micro-savings app that invests users’ funds in gold, is a big believer in the power of compounding. Her app presently boasts 50k+ active users, where users manage to save around Rs.4,000 per month. She cites Warren Buffett, who made the bulk of his wealth after turning 60, thanks to compounding. “It’s always better to save in bits every day rather than leaving all investments to the future when you think the time is right.”

The elephant in the room is the concern over data privacy. When one signs up with a micro saving app, one gives them access to messages on phone. These applications read your messages to record the transaction amount. If you are comfortable giving this access to a third party, go ahead and download an app now and watch small change grow big over time.


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