Have you heard of micro-investing? It’s a relatively new concept that has been gaining in popularity in recent years.
But what is micro-investing, and why should you consider it for your investment portfolio? This article will provide a simple guide to micro-investing, including its benefits and how to get started.
What Is Micro-investing?
This type of investing involves putting small amounts of money into a variety of investments.
Nowadays, newbies use great micro-investing apps that help them save and invest their spare change.
Micro-investors buy a few shares or investments in different companies rather than buying one big investment.
For example, if you had $500 to invest, instead of buying one share of Apple for $500, you could micro-invest and buy five shares of Amazon for $100 each.
You can micro-invest in a wide variety of investments, including stocks, bonds, mutual funds, real estate, and more.
When you’re starting out, micro-investing is a great way to get your feet wet in the investing world without risking a lot of money. It’s also a good way to build up a diversified portfolio over time.
Benefits Of Micro-investing?
Micro-investing is the perfect thing for a beginner in this world as it doesn’t require too much money. You can get your fair share of investment options which will pay off eventually after some time.
Thanks to the fact that you’re not putting in too much money, the risk levels are significantly lower than any other type of investment. Here are the main benefits of trying out micro-investing.
Accessible For Beginners
This is the most essential benefit of micro-investing. If you are a beginner, don’t have much money to invest, or both, micro-investing can help get you started on the right foot.
You don’t need thousands of dollars to start investing. In fact, with some micro-investing platforms, you can start with as little as $500.
This makes it easy and accessible for anyone who wants to start investing but may not have a lot of money saved up yet.
Not only is micro-investing accessible in terms of the amount of money needed to get started, but it is also relatively simple and straightforward.
There are many apps and platforms that make investing easy and convenient, even for beginners. Many of these apps offer features such as automated investing, which can help take the guesswork out of investing. They also often have customer support teams that can answer any questions you may have about investing.
So, if you’re a beginner who’s looking to get started in investing, micro-investing is a great option for you. It’s accessible and easy to get started, and you can start with very little money.
Better Returns Than Saving
You always need to find ways to save money. However, you can only cut your expenses so much. What if there was a way to make your money work for you? Micro-investing is one way to do this.
Micro-investing is investing small amounts of money into something that will grow over time. The benefit of this is that you can see better returns than if you had simply put the money into savings.
For example, let’s say you have $50 that you want to invest. You could put it into a savings account that gives you 0.01% interest. After one year, you would have $50.05.
Lots Of Options
There are tons of investment options for micro-investing helping you to properly diversify your portfolio. These are the following:
- Stocks: You can buy stocks of companies that you’re familiar with and believe in their future success.
- Bonds: If you’re looking for stability and income, bonds are a good option.
- ETFs: Exchange-traded funds offer exposure to a basket of assets, which can include stocks, bonds, commodities, or a combination thereof.
- Index Funds: Much like ETFs, index funds give you diversified exposure to a particular market or asset class.
- Real Estate: With micro-investing apps, you can now invest in fractional shares of real estate properties.
- Peer-to-Peer Lending: With this option, you can effectively become the bank and earn interest on loans that you make to individuals or businesses.
- Cryptocurrencies: Although a bit more volatile, cryptocurrencies have become a popular investment in recent years.
Volatility is often seen as a bad thing when it comes to investing.
However, volatility can actually be a good thing when it comes to micro-investing. With micro-investing, you’re able to invest small amounts of money into a variety of different assets.
This diversification helps to protect your investment from the volatility of any one particular asset.
For example, let’s say that you invest $100 into a stock. If the stock goes up by 50%, your investment is now worth $150.
However, if the stock goes down by 50%, your investment is now worth $50. On the other hand, let’s say that you invest $100 into a bond.
If the bond goes up by 50%, your investment is now worth $150. However, if the bond goes down by 50%, your investment is still worth $100.
Risks will be significantly lower when you micro-invest as compared to other types of investments.
This is because you are investing small sums of money into a larger number of companies.
Therefore, if any one company performs badly, it will have a minimal impact on your overall investment portfolio.
This diversification of investments reduces your risks and helps to stabilize your returns in the long run.
Finding proper investment opportunities will make sure you’re not affected by inflation. Micro-investing is a great way to beat inflation and make your money work for you.
Once there’s an economic recession, it is harder to make your money work for you. Many people lost a lot of money during the recession.
Micro-investing allows you to build a diverse portfolio that will protect you from any economic downturn. This is because when one market is struggling, another might be doing better.
So micro-investing not only helps you beat inflation but also provides security during an economic recession.
Micro-investing is a fresh opportunity for people who have less money to get into the investment game.
There are many benefits, but the first must be accessible to newbies. You’ll get better returns than saving money and get a ton of options on your hand.
These investments represent good volatility and will help you beat inflation once it appears!