From $1 to $1,000,000 Micro-Investing
All it takes to begin your investment journey nowadays is just $1.
Investing in the stock market has never been as accessible as it is today. With new brokerages like Robinhood and Acorns, you can start investing with as little as $1.
Not only can you invest with very little capital, but these apps can be configured to make it all completely automatic. You will not even have to worry about depositing money into your investments with an app like Acorns because it will round up your purchases and invest a few cents each time you spend money.
This sounds great, but Acorns does come with additional fees for this convenience.
Who Can Benefit From Micro-Investing
A micro-investing strategy is recommended for people who are looking to begin their investing journey but aren’t quite sure where to start yet. This is great for new investors because you are not risking a lot of capital and you can see how your money will grow over time due to compound growth.
You can even invest in more expensive stocks like Tesla, Amazon, and Google with fractional shares! One of the most widely known investing philosophies is the dollar-cost averaging method into funds or companies that you believe will do well over a long period.
Dollar-cost averaging is a strategy where you do not attempt to time the market but instead add to your investments consistently over time.
As your investments increase in value and you keep depositing funds, you will notice that over time your account will grow exponentially faster.
Downsides of Micro-Investing
Micro-investing is a low-risk way to get started with stock market investments but there are some downsides to consider as well.
If you are using an app like Acorns, they charge additional fees to manage your money. Even though these fees sound like nothing, at just a couple of bucks per month, you must consider the average Acorns account size. If you are just starting on Acorns and have contributed $100 to your account, then even just $2 per month in fees is a whopping 2% of your account.
To put things into perspective, the stock market has provided a long-term average return rate of around 8% per year. This problem can easily be fixed by using an app like Robinhood which charges no fees but also makes you pick stocks to buy on your own.
However, all you must do is set up an automatic recurring deposit on an S&P 500 fund like the ticker symbol “SPY.” Once you do this you can choose to deposit just a couple of bucks per week, and it will automatically go into a similar allocation as Acorns without the additional fees.
Acorns only has a couple of different investment portfolios to pick from and most can be replicated with some basic funds traded on the stock market.
Impact Micro-Investing
Impact investing is an investment strategy where you buy companies or funds that are working to promote beneficial environmental or social effects for the world in addition to providing financial gain.
Even a small impact micro-investing account can help strive for more positive social or environmental impact.
This method would be easy to implement on Robinhood as well with very little capital required. You would simply just investigate companies traded on the stock market that are positively impacting our world and set up a recurring deposit for as little as a couple of bucks per week or month.
Imagine if all of us in the world started investing a couple of dollars per month into impactful investments. The amount of change we can bring to the world is astounding.
Most people only view the stock market as a way to make money, but depending on what you invest in you can help make a positive impact on our world.