Investing is perhaps one of the best and most sustainable methods to grow money and accomplish your important financial goals in life.
To invest, you will need to have some capital for that. If you don’t have enough to make your first investment, you can start micro-investing, which lets you contribute as low as $5 to $10 per trade or as much as you can currently afford.
Micro Investing Explained
In a nutshell, micro-investing is the method of constantly depositing, saving, and allocating micro amounts of money into your chosen investment.
Instead of putting a considerable amount of money instantly, you make small contributions, including spare changes, every day to markets via exchange-traded funds (ETFs) or fractional shares and often done through a platform or an app.
Such gradual, small contributions make this method interesting to investors. You can earn and diversify your investments without putting a significant amount of your hard-earned money on the line.
Consistency is key to micro-investing. The small investment amounts you make will only build up if you’re investing them daily.
Ideal Age to Micro Invest
Investors of all ages can practice micro-investing, although it is most suitable and beneficial for young market players between the age of 18 and 25.
That’s because investors within that demography often engage with digital or online transactions, and their regular spare change contributions can add up to a substantial amount.
So if you’re a young individual looking to enter the investing space but unsure where to start, micro-investing can provide you with a straightforward way to invest without requiring you to change your lifestyle.
Getting Started with Micro-Investing
Overall, anyone can do micro-investing. You only need a debit account and sign up with a platform or an app that mainly provides micro-investing services.
Spare change investing is one ideal way to start micro-investing. This method involves automating the spare changes from your online transactions.
For example, if you paid for your groceries through a debit card, you can use a round-up investment app to round up the amount automatically to, let’s say, the next ten and then invest the spare change on your behalf.
Micro-investing can be your starting point to understanding the complexities of investing. Or, it can serve as another account in addition to your existing investment portfolio.
Whether you treat it as your starting point or a secondary account, micro-investing can accelerate your journey towards your financial goals.
Factors to Consider
As mentioned above, consistency plays a crucial part in micro-investing. The small investments you make will only build up if you’re investing them on a daily basis.
However, micro-investing may not be as efficient as with small financial goals if you aim to achieve big long-term financial goals such as retirement or buying a house. Still, it makes for a good starting point.
So in micro-investing for your big, long-term goals, your small investments should become more regular and larger in the long run. If you store your money in a savings account or set it aside for future investment, note that it could lose value over time.