INVESTINGBUDGETING

Start Investing with Just $5

There are lots of common misconceptions surrounding investing. One of the biggest is that you need to have a large sum of money saved to start investing, when in actuality you can start your portfolio through small, incremental investments.

Micro-Investing

Micro-investing is the act of putting small sums of money into a portfolio. Depending on the company, the cost of one share of a stock can be hundreds of dollars, which may deter people from starting their investing journey. Micro-investing helps eliminate this barrier of entry for young and beginning investors, giving them the opportunity to dive into the market at a price point that feels more realistic.

How to Start Micro-Investing

The main way to start micro-investing is to buy fractional shares — or partial shares — of a company. For example, let’s say that you’re interested in investing in Company XYZ, but the current market price for one share is $100. With fractional shares, you’re able to invest the amount of your choice under $100. While you won’t own a full share of a stock, you will have partial ownership that still gives the potential for growth on your investments. One key point to be aware of is that not all brokerage firms and stocks offer fractional share investment options. If you are interested in potentially buying fractional shares, conduct research on which firms offer this capability.

Fintech Applications

There are several fintech applications that are specifically promoted to encourage micro-investing. For example, some applications round up every purchase you make to the next dollar amount. These apps compile the extra cents and directly deposit them into your investing account. While it may seem pointless investing such a little amount of money, a tiny bit can go a long way with compound interest on your side. Just think about all the purchases you make throughout the week, month and even year. Over time, all the deposits will add up without you having to think about it!

Investing doesn’t have to be intimidating or expensive. Micro-investing can be an excellent strategy used to break traditional barriers and make it possible for everyone to start investing and building wealth. By taking these small steps today, you can lay the foundation for a stronger financial future.

Sources:

https://www.bankrate.com/investing/micro-investing/

https://www.thepennyhoarder.com/investing/how-to-start-micro-investing/

https://www.trading212.com/learn/investing-101/fractional-shares#the-pros-and-cons-of-fractional-shares