Can You Make a Lot of Money Investing $1 At a Time?
I run a personal finance and investing site at FinanceGourmet.com. I signed up with Grifin to test and write a review. When I was done, I just left it running.
What Is Grifin?
Grifin is one of the many apps, websites, brokerages, online banks, and financial gizmos out there designed to help you save and invest money by making it easy, automatic, and cheap. In this case, for every charge you make on a registered card, it buys $1 worth of stock in the company. The idea is to invest in companies that you believe in, since you actually use them. Hence, the company motto: Stock where you shop.
How Can I Invest $1?
One of the most common questions any financial expert gets asked is how to invest relatively small amounts, like where is the best place to invest $1,000, or where should I invest $5,000, and so on.
The trick to answering these questions is that it depends on how and when you will want to use that money in the future, and that it is nearly impossible to do anything other than roll the dice on a stock or two with that amount of money. So, we default to recommending an ETF or mutual fund or two.
Ironically, no matter how good that advice is, it is NOT what people want to hear. They want to “really invest” not just put money in a glorified bank account. Micro investing apps like Grifin and other partial share investments create that feeling of investing for real. As it turns out, investing in this way doesn’t add up the way you might expect.
Everyone knows about compound interest. What not everyone understands is that compound interest is like a very large freight train. When it gets going it roars forward as you might expect. But many savers and investors forget, it takes a long time for that train to get going in the first place. As it turns out, investing $1 at a time also takes a long while to add up. And remember, this money isn’t magic, it is a dollar of your money, even if someone else takes it from your checking account and buys a partial share of a stock with it.
How Fast Can Investing $1 At a Time Add Up?
So, the real question then, is how fast can I get rich by investing $1 every time I buy something?
Unfortunately, I don’t know. I haven’t got there yet.
Despite using Grifin on one of my main credit cards (one of two I split pretty much every purchase between) since Fall of 2021, to this day I have just $759. In that time, my account is up a bit over 5%, so I didn’t invest all of that $759. Still, it’s been two years, and it is less than $1,000. Maybe I don’t buy enough stuff?
As it turns out, my spending looks like I would expect a lot of people’s spending looks. I buy a bunch of stuff from Amazon. Then groceries, McDonald’s, Starbucks and Home Depot. Oh, and that savvy investment in Berkshire Hathaway? That is actually just going to Dairy Queen, which is owned by Warren Buffet’s Berkshire Hathaway.
Is investing a dollar a day in Grifin a waste of time? Not really. There are no negative side effects. It turns out I only spend a few bucks every week at eligible companies. Don’t forget, if they don’t have a stock, it doesn’t make an investment. All my favorite local restaurants, for example, generate no investment.
In the end, investing is a smart move for almost everyone, and even though compound interest does take a while to get going, in 20 years, this might be a lot of money. But if you want to invest $1 per day to buy a jet ski? You’re gonna be here a while.
