A Beginner’s Guide to Micro-Investing

How Micro-Investing Works

Micro-investing apps allow you to automatically invest small amounts of money in stocks, even if you know absolutely nothing about the stock market. They funnel your extra cash into portfolios of stocks that they craft for you. Your investment money is typically used to buy “exchange traded funds,” or ETFs. These funds helpfully spread your risk around by buying up shares in dozens or even hundreds of different companies.

Don’t worry, you don’t have to suddenly start following the stock market. You don’t have to watch CNBC or read The Wall Street Journal. You can continue binge-watching “House Hunters” or “Cupcake Wars” if you like.

Why Millennials Like Micro-Investing

Here’s another plus: You don’t need much money to start micro-investing. Heck, you can launch this baby with five bucks if you want.The idea is to get you to start investing.

You’ve probably heard that Americans aren’t saving enough for retirement. Well, it’s true! The average U.S. family has nowhere near enough money set aside for retirement. It’s going to be such a train wreck when we all get old. If you’re not already investing, the first step is the hardest. No, micro-investing won’t make you rich. Instead, this is about getting you to take that crucial first step toward investing for your future.

Is Micro-Investing Worth It?               

                                                  

If you’re even a little math-minded, you might have realized: If you invest a small amount, you can only expect a small return, right?You probably won’t become a millionaire or retire early from investing your spare change.Realistically, these apps could help you set aside a few hundred dollars a year. It’s nothing to write Warren Buffett about — but it’s no small feat if you’ve been living paycheck to paycheck, wondering how you can get ahead.You could have $500 in your emergency fund by the end of the year — before the next thing on your car breaks.Or you can use micro-investing as a first step into bigger investments.Or just save for one more year, and you can get yourself a teacup pig!