Invest Spare Change

How To Invest Your Spare Change

It’s called “micro investing”. Investing your spare change is much easier than manually set aside a fixed amount from your checking account every month. The psychological aspect is easier. Most people don’t consider their spare change as capital, but it actually is.

You have to think about how much to transfer, consider how it will affect your budget, and then actually press the button. And you have to do it over and over. That’s where a forced savings feature, which not every app has, can be extremely beneficial in helping you reach your financial goals.

The most well-known example of forced savings is a 401(k), through which a person automatically invests a portion of their paycheck. After the account is set up, the investment is involuntary — the agreed percentage gets pulled out of your pay and set aside for retirement, whether you like it or not. And while you can usually access those funds in an emergency, there are severe penalties for doing so.

An example of a micro investment app that has a forced savings feature is Acorns, which rounds up your spare change. After you sign up and sync your financial accounts, the app automatically invests small amounts every time you make a purchase, without requiring any additional work on your part.

Forced savings can help you achieve both short-term and long-term financial goals. For example, you can use forced savings to save for a car purchase in a few years, or to start a Roth IRA.

Micro investing apps make it easy for anyone to get started. There are a lot of people who simply can’t comprehend investing in their current situation, but these services allow you get started with almost any amount of money — even if it’s just a few dollars. Taking even small steps like that are an important part of building financial momentum.

Forced savings. A great feature of many of these apps is automation; you can save or invest money without having to think about it. Yet, at the same time, it’s still being done responsibly and in small amounts, so it won’t drain your checking account.

Low barriers to entry. Investing through traditional brokerage accounts can be intimidating if you’ve never done it before. Micro investing apps have user-friendly interfaces that simplify the process, have low (or no) minimum deposits and investment minimums, and low (or no) user fees.

The trading fees associated with traditional brokerages can also make small-scale investing cost prohibitive. If one share of a stock or an exchange-traded index fund is $30 per share and you only have $30 to invest, paying a $5 trading fee (which is what E-trade, a traditional online brokerage charges) means you’d be down 16% on your investment the second you click “buy.”

Great for those with inconsistent income. You should be investing and preparing for the future, regardless of the source of your income. But that’s often easier said than done. If you’re someone whose income fluctuates — such as a freelancer who has more clients and projects in one month and fewer in the next — these services are a solid option because they allow you to save or invest what you can at a particular time.

Acorns is a micro investing app that helps you get started with investing via two main features.

The first is a feature called Rounds Up. We’ve all heard about the practice of saving loose change in a jar or piggy bank, and Rounds Ups essentially automates that practice. After linking your debit card and/or credit card to your account, Acorns will “round up” any purchases made with those cards to the nearest dollar, half-dollar or quarter (depending on your preferences).

Acorns also has a feature called Found Money, which offers a percentage back for shopping at participating stores through its portal and app, and then deposits those funds into a mutual fund account. The company has partnered with hundreds of retailers, so you won’t have trouble finding brands you shop with. Acorns’ Found Money percentages usually range from 2% to 10% — a nice bonus for buying items you were going to purchase anyway. Just make sure you don’t use this as an excuse for unnecessary spending.

Both Round Ups and Found Money go into your investment portfolio. Acorns gives you an automated system to begin investing right away, regardless of your income or experience.

Pros: The Acorns app gives you the ability to adjust your investment portfolio to meet your specific financial goals. You can choose your acceptable level of risk, timeline, and a few other criteria.

Cons: Because an Acorns account is an investment account, it’s not designed to help you meet short-term goals like paying off a credit card or student loans.

Fees: Acorns fees are $1 to $3 per month, depending on the plan you select. They also offer four years of free service at the $1/month level for students with a valid .edu email address.

Minimums: There is no minimum to open an account, but $5 is required to start investing.

How To Invest $50 In The Stock Market

Before you start investing in the stock market, you want to make sure it makes financial sense.

The # 1 reason why you shouldn’t start investing is high-interest debt. If you still have high-interest debt, it’s in your best interest to hold off.


The stock market has returned on average of about 7% a year.

So, if you have debt at a higher interest rate than 7%, paying that off is your best investment. It’s also a guaranteed rate of return, something the stock market can’t provide.

Next is understanding that investing in the stock market is a long-term commitment. Warren Buffett (one of the greatest investors of all time) said, “our favorite holding period is forever.”

In other words, go in with the mindset that you’re going to hold this investment long-term (or at least a decade).

If you’re going to need this money in a month or even a year, the stock market isn’t the place to be.

A good strategy here is to build an emergency fund.

Once you have your high-interest debt paid off and an emergency fund (I’d recommend at least a month but ideally 3 months of expenses), it’s time to start investing.


There are two primary types of investment accounts.

  1. Taxable Accounts
  2. Retirement Accounts

In a taxable account, any income earned is taxable. This includes dividends and gains if you were to sell.

Retirement accounts, such as IRAs and 401(k)s, taxes are either deferred or paid upfront.

The difference between these accounts is huge!

If you invested $50 a month between the ages of 25-65.

In a taxable account, at the age of 65, you’ll have $51,055. In a traditional retirement account, at the age of 65, you’ll have $75,137.


You might be thinking that you want to take your $50 and invest it in a company like Facebook or Tesla.

But, if maximizing your returns is your goal (which it should be) that may not be in your best interest.

If you’re investing $50, fees will eat away at your gains. At a low-cost brokerage account, you’re still going to be paying about $5 a trade. So, instead of investing $50 you’re actually investing $45. 

One brokerage that offers free investing is M1 Finance, which I recently reviewed. 

Second, many investment firms don’t allow you to buy fractional shares. As I write this a share of Tesla is trading around $300. So, you’d have to buy an entire share to get started.

But the most important reason why you don’t want to buy individual stocks is most investors don’t succeed with this strategy.

Few investors are able to pick individual stocks and beat the market over the long-term. They might get lucky once (and tell a lot of people about their luck) but study after study has shown that few succeed in the long run.


An index fund is a mutual fund that holds a collection of stocks.

For example, the S&P 500 index fund holds the stocks of all the companies in the S&P 500 (the 500 largest companies in the U.S.).

The advantages of index funds, especially for those wondering how to invest $50 in the stock market are:

  • Low Fees – Instead of paying a commission every time you invest, index funds charge one very low-rate.
  • Tax Efficient – Because they don’t trade a lot of stocks, index funds occur minimal taxes
  • Low Maintenance – You get a totally hands-off investment that beats 90% of other investors!


The one downside to getting started with as little as $50 is that you’re limited to certain investment providers.

Many investment firms have minimum deposits that start at $1,000.

Fortunately, there is one very good option I’d recommend to someone looking to invest a small amount.

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