Investing pocket change is a great way to start building wealth from a young age. By regularly setting aside small amounts of spare change, you can develop good savings habits and take advantage of the power of compound interest. This article will explore tips on how to get started with pocket change investing, the benefits of starting small, and different investing options to consider.
Open a high-interest savings account to deposit pocket change
A high-interest savings account is one of the simplest ways to invest pocket change. Look for an account with no minimum balance and no monthly fees, so you can deposit even just a few dollars at a time. Online banks tend to offer the highest interest rates. Automate transfers from your checking account so you don’t have to manually move over money each time. Watching your pocket change savings grow through interest, even if slowly at first, will keep you motivated to continue.
Use a micro investing app to buy fractional shares
Micro investing apps like Acorns and Stash allow you to invest your spare change by automatically rounding up purchases and depositing the difference into an investment account. The money is then used to buy fractional shares of index funds and stocks. This makes investing accessible even with just a few dollars. The power of compounding means your money can grow substantially over decades.
Consider a robo advisor for hands-off investing
Robo advisors like Betterment and Wealthfront offer automated investing services, including portfolio management and automatic rebalancing. You can open an account with no minimum and set up recurring transfers from your bank account. Robos invest your money into diversified ETF portfolios based on your risk tolerance. Though fees are involved, robos are a simple way to grow your pocket change over time.
Invest in yourself through books, courses, etc
Don’t underestimate the value of investing in yourself, even if it’s just small amounts at a time. Spending pocket change on personal finance books, online courses, professional credentials, and other self-improvement resources can pay off tremendously in the long run. A little bit of knowledge goes a long way in building your skills and increasing your earning potential.
Investing pocket change can instill good financial habits that set you up for success later in life. Take advantage of the many micro-investing options now available. Consistently setting aside small amounts of money, rather than spending it on impulse purchases, is an accessible way for anyone to start building wealth.