Last Updated on July 3, 2022 by tim
Microinvesting is the concept of regularly investing small amounts of money. The benefit of microinvesting is that it allows you to steadily build up your investment portfolio without much strain on your bank account. Microinvesting can be used by all investors regardless of experience level. Here is how you can get started microinvesting.
- Decide on What to Invest In
The main options for microinvestors are stocks and bonds. Microinvestors are typically only investing a few dollars at a time, which is not enough to invest in other asset classes like real estate (property) or commodities (for example, gold or silver). Many investors opt to invest in ETFs (exchange traded funds) rather than purchasing the stocks or bonds directly. By investing in an ETF, you can automatically invest in a diversified basket of funds. Stocks are typically riskier than bonds, and the most popular ETFs usually track the S&P 500.
- Find a Good Microinvesting App
With microinvesting, you are typically looking to purchase fractional shares (pieces of a single share of stock). Therefore, you need to find a good microinvesting app that supports fractional investing. Some popular apps are Robinhood, Webull, and Acorns. Each of those brokerages offer mobile apps. Sign up for an account and setup regular deposits to your account. Even if you can only regularly deposit a few dollars at a time, it adds up quick.
- Monitor Your Investments
Regardless of what you choose to invest in, make sure to monitor your investments regularly. If you are using a mobile app, use it to regularly check your account. Keep an eye out for any sudden drops in your account value, and decide if you want to keep holding or you want to sell. Likewise if you see a massive increase in stock price, you might want to sell and cash out.