What is Micro-Investing?

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A lot of investing-related language can be straight-up confusing. This can make ownership seem scary and much more complex than it actually is. We’d rather ownership be approachable, so we’re breaking down some of the common terms you might see or hear.

Investing isn’t just reserved for folks with a lot of extra cash lying around, although it can seem like it sometimes. Investing can be for everyone.

While minimum requirements for brokerage accounts and trading fees might have made it harder (or even impossible) for some to get started in the past, there are now ways to begin investing that likely won’t break the bank: micro-investing.

What is micro-investing?

Say you really like Totally Made Up Company and want to own a piece of it. But the current price for one share of Totally Made Up Company stock is $500 and you only have $5 to spare right now.

Thanks to micro-investing apps, you can now buy $5 worth of a company’s stock, even though it’s not a full share. Micro-investing lowers the barriers of entry so almost anyone with a few extra bucks can start investing and learning.

Some pros to micro-investing apps

  • Mobile apps have helped make it easier to get started investing. Not only can you start investing with less money—you can also choose where to invest right from your phone.
  • With that ease and also lower initial investment amount required, you can have more freedom to test out a variety of apps or types of funds as you wade into the investor and ownership pool for the first time.
  • You can learn what works best for you as an investor (do you only want to own parts of companies your values align with or are you most concerned about earnings and returns?) with less money and thus seemingly lower risk. It’s nice to get comfortable before diving into the deep end.

Some cons to micro-investing

  • Some micro-investing apps charge fees. Be sure you read the fine print and pay attention to fee schedules so you know what to expect.
  • While investing small amounts at a time can be a great way to learn the basics of investing, don’t expect it to result in huge returns. It’s pretty unlikely you’ll build your retirement fund from micro-investing.
  • Though some apps have questionnaires to learn more about your financial situation, it may be difficult to get investment advice that’s tailored to you.

Overall, micro-investing can offer a great way to get your foot in the investing and ownership door, and a way to learn as you go. And you know us, we’re huge fans of folks getting to own what they love with less.