Micro investing includes taking a small money flow and rolling that fund into an investment portfolio. This strategy seems a practical choice for new investors if you just get started with small dollar amounts.
Micro investing typically takes some time to grow since you start small than the average investor. With this in mind, micro-investing is apt for young investors with enough time to help micro-investing work its charm.
However, keep an eye on fees. When you invest a small amount every month, even modest charges can seriously consume your returns—for instance, management fees, advisory fees and account transfer fees.
Benefits Of Micro Investing
You can find several micro-investing platforms that offer a quick and straightforward way to link your bank accounts, functioning as a digital piggy bank for your loose change.
Set A Savings Habit. Micro investing can assist in making life-long, positive saving habits. It is an efficient way for anyone to initiate investing their funds, regardless of their budget.
It is Convenient. It needs minimal input on your part. In some instances, the complete process is automated, and you can quickly start creating an investment balance without having to do much groundwork.
No Need To Be An Expert. You can offset the funds in your investment account in a diversified portfolio based on your risk appetite and financial goals.
Minimal Investment Needed. You do not require a considerable balance in your savings account to leverage the micro-investing strategy. Start by investing your spare change and overseeing your balance growing over time.
Risks Involved
Like any investment, there is no assurance you will make a profit. You may end up yielding money. Beyond the risk of loss, here are a few things to contemplate before you sign up:
Easy To Forget. Leveraging the micro-investing platforms is an excellent strategy. However, the seamless process of these platforms may make you forget to review your investments.
Fees. You may require to pay commission fees, management fees or account fees. Moreover, such charges can devour profits.
Two Cents
Micro investing is a helpful way to step on the investment ladder as a first-time investor. However, it has its limits and may not be a practical option for everyone. If you are in a dilemma about this strategy – whether you are worried micro-investing would not take you far enough or invest feels too risky – explore the following micro-investing alternatives: annuities, investment bonds, real estate investments.
You do not need a large sum of money to get started investing. Fortunately, with micro-investing components like fractional shares and round-ups, you can easily invest using any amount you would like.
