Today, let’s introduce a topic called micro-investing. Perhaps you’ve heard about it before or perhaps is a brand new term to you. Either way, we’re here to help explain it in the best way possible to help investors of every level understand all about micro-investing and how to get started.
So, What’s Micro-Investing?
Micro-investing is exactly how it sounds. It’s a method for investing micro amounts or small increments of money into savings or investing accounts at a time. This could include putting a few dollars away every week for a college fund or investing a small sum of money per paycheck into the stock market. How you wish to micro-invest and allocate your money is completely up to you.
Why Consider Micro-Investing?
Micro-investing is a great method for those just starting out. If you’re looking to start investing and you’re unsure of how or where to start, micro-investing allows you to begin with small increments. This helps to minimize your risk of losing large sums of money while also slowly helping you gain a better understanding about the world of investing.
On the other hand, you won’t see significant earnings when you’re only investing a few bills at a time; however, investing is ultimately for long term goals. This money is something you want to see grow over decades of time and this method of investing is a good way to ease into the idea of investing your money.
Plus, if you’re putting aside small sums of money consistently, this will quickly begin to add up to those who invest greater sums of money once in a blue moon.
How Does One Start?
There are a variety of different platforms that can help you with micro-investing. Certain investing apps allow you to invest in fractional shares of stocks. This means that instead of purchasing a single stock from a company like Google whose shares cost thousands of dollars each, you can invest a few dollars into that stock and receive a small percentage of one singular share.
Services that allow purchasing fractional shares include Stash and Robinhood.
If investing in the stock market seems too daunting or complicated, looking further into fractional shares is a good place to start to get a better idea of how the market changes over time. However, if you’d rather invest into a savings account rather than the stock market, micro-investing can work in this way as well.
You can begin by setting aside a few dollars of your earnings every week into a savings account yourself or look into a micro-investing service like Acorns. The app Acorns automatically rounds up your credit or debit card purchases to the nearest dollar and sets aside the extra cents into an account of your choice. With every purchase you make you can be constantly adding money to your savings account, yet these increments will always be less than a dollar at a time. However, that’s what micro-investing is all about. You may not see large savings or investments immediately, but every little bit counts over time.
Is micro-investing right for you?