Micro-Investing: The Risk-Free Way to Start Growing Your Money
In the 21st century, we like things small.
Our headphones, computers and dogs are all shrinking. Teacup pigs are surging in popularity (at least in meme form). File compression is such a well-known part of everyday life that an entire sitcom is based on the concept.
It’s no surprise we like our investments small, too.
Why Millennials Love Micro-Investing
Investment, as a term, seems way too big for most of us. It’s too much to learn, too much responsibility, too much risk — just too much.
Micro-investing, on the other hand, is just plain adorable. Snappable, ‘grammable adorableness.
Like a pig small enough to fit inside a teacup, micro-investing is about investments small enough to fit anyone’s budget.
Yes, even yours.
Even better, this strategy typically comes through an app.
Most importantly, you don’t really have to know anything about the stock market to make this kind of investment.
Micro-investing apps let you automatically invest small amounts of money into a portfolio they craft for you. You set up a profile that lets the app know the best kinds of things to invest your money in.
Here are Some of Our Favorite Micro-Investing Apps
Through Stash, you choose portfolios based on the types of companies you want your money to support. Choose the “Clean & Green” fund to invest in green energy companies, for example, or the “American Innovators” fund to invest in tech companies.
Acorns makes it easy to invest without missing the money you set aside. It rounds up debit- or credit-card purchases to the nearest dollar and invests your digital change.
Clink lets you invest a set amount per day, week or month — a minimum of $1 a day — automatically drawn from your bank account.
Where Your Micro-Money Goes
When you invest through a micro-investing app, your money is typically going into exchange traded funds, or ETFs.
ETFs are treated like other funds in the stock market, but they include investments in several companies.
And they let investors like you own portions of shares in stocks, instead of full shares — which you might not otherwise be able to afford.
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.
Take the money you save without thinking about it this year, and open a larger investment account. You only need $100 to open an account with Aspiration’s Redwood Fund, which invests your money in sustainable businesses.
Or just save for one more year, and you can get yourself a teacup pig!
Whichever you choose, life is about to get a lot more Insta-worthy.
Dana Sitar (@danasitar) is a senior writer/newsletter editor at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).