Can You Really Build Wealth Through Microinvesting?

Reporter: Rebecca Lake

Publication: US News


Deadline: May 18, 2017 11:00 pm

The rise of robo-advisors has made microinvesting popular among younger investors but the question is, can you really get rich this way? What’s the basic principle behind microinvesting that makes it appealing to investors, especially younger adults? What are the primary advantages of microinvesting with smaller amounts versus tying up a chunk of cash in just one investment? Cost? Convenience? What are the drawbacks of this strategy? For example, what tax/cost considerations should investors keep in mind if they’re using a robo-advisor to microinvest in a taxable account? What are some best practices microinvestors should follow to make sure they’re getting the most out of the dollars and cents they’re investing? Would a younger investor be better off contributing a smaller amount regularly to their 401(k) or an IRA if they’re focused on the long-term?

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