Micro-investing apps have revolutionized the way people invest their money. These apps allow individuals to invest small amounts of money into various assets such as stocks, real estate, or cryptocurrencies. One of the most popular uses for micro-investing apps is to boost an emergency fund and work towards retirement.

The Power of Compound Interest

Compound interest is a powerful force that can help your savings grow over time. When you invest small amounts of money into a high-yield savings account or a brokerage account, those earnings are reinvested back into the account. This means that the interest earned on the principal amount becomes part of the principal for the next period, causing the growth to accelerate.

For example, let’s say you have $1,000 in a high-yield savings account with an annual interest rate of 2%. At the end of the first year, you would earn $20 in interest, bringing your total balance to $1,020. In the second year, you would earn 2% on the new principal amount of $1,020, which is $20.40. This may not seem like a lot, but over time, it can add up.

How Micro-Investing Apps Can Help

Micro-investing apps are designed to make investing easy and accessible for everyone. They offer low fees, no minimum balance requirements, and a wide range of investment options. Here are some examples of micro-investing apps that you can use to boost your emergency fund and work towards retirement:

Robinhood

Robinhood is one of the most popular micro-investing apps available today. It offers commission-free trading on stocks, ETFs, options, and cryptocurrencies. You can also set up automatic investments using their “Dollar-Cost Averaging” feature.

For example, let’s say you want to invest $100 per month in your emergency fund. You could set up a recurring investment with Robinhood, and they would automatically buy shares of the stock or ETF that you choose. Over time, this can help your savings grow significantly.

Acorns

Acorns is another popular micro-investing app that allows you to invest small amounts of money into various assets. They offer a “Dollar-Cost Averaging” feature similar to Robinhood, as well as a “Found Money” program that rewards users for shopping at certain retailers.

For example, let’s say you want to invest $50 per month in your emergency fund using Acorns. You could set up a recurring investment and they would automatically invest the money into a diversified portfolio of stocks and ETFs. Over time, this can help your savings grow significantly.

Stash

Stash is another micro-investing app that allows you to invest small amounts of money into various assets. They offer a “Smart Portfolio” feature that uses an algorithm to select investments based on your risk tolerance and goals.

For example, let’s say you want to invest $20 per week in your emergency fund using Stash. You could set up a recurring investment and they would automatically invest the money into a diversified portfolio of stocks and ETFs. Over time, this can help your savings grow significantly.

How to Use Micro-Investing Apps

Using micro-investing apps is relatively easy. Here are some steps you can follow:

1. Choose an App

The first step is to choose a micro-investing app that aligns with your goals and risk tolerance. You should consider the fees, investment options, and user interface when making your decision.

2. Set Up an Account

Once you’ve chosen an app, you’ll need to set up an account. This typically involves providing some basic information such as your name, address, and social security number.

3. Fund Your Account

You’ll need to fund your account with the amount of money you want to invest each month. You can do this by transferring funds from a bank account or by using a debit card.

4. Set Up Recurring Investments

Most micro-investing apps offer recurring investment options that allow you to set up automatic investments each month. This is a great way to make investing a habit and to take advantage of dollar-cost averaging.

5. Monitor Your Progress

It’s important to monitor your progress over time. You can do this by logging into your account regularly or setting up notifications for when your investments reach certain milestones.

Conclusion

Micro-investing apps are a great way to boost your emergency fund and work towards retirement. They offer low fees, no minimum balance requirements, and a wide range of investment options. By following the steps outlined in this article, you can start using micro-investing apps today to grow your savings over time.