The idea of investing can seem overwhelming or intimidating. You might think you need to be well-versed in the stock market or hire a professional broker to even begin.
It’s also a common belief that you need thousands of dollars in order to invest. Truth is, anyone can get into the market these days and with very little money. If you’re new to investing, check out these five easy ways to get started.
1. Take Baby Steps to Savings
While you don’t need huge sums of money in order to invest, it’s good to have some set aside. You can do this even if you’re typically not very good at saving or if your budget is tight.
Simply putting away $5 or $10 dollars a week could really add up over time. Take a look at how you’re currently spending your money to see if there are expenditures you can cut down, such as coffee shop lattes or eating out.
Putting that money away can help you reach a sizable amount even more quickly.
2. Try Putting a Little in the Stock Market
It’s possible these days to invest in the stock market with very little money upfront. With just a few dollars, you can begin getting your feet wet and practicing while you learn more about how to invest in stocks.
This is a great way to obtain firsthand investment knowledge with very little risk. In fact, there are some sites that let you get started with only one dollar, and they don’t charge trade commissions. This charge used to make it difficult for people with little savings to invest.
Thankfully, this barrier isn’t an issue for current newbies. Another way investing is more accessible today is that many companies will allow you to invest in only a partial, or fractional, share. This lets you diversify your portfolio by investing in some higher-priced stocks without having to buy a whole share.
3. Consider a Robo-Advisor
When it comes to stock market investing for beginners, one easy way to go is to use a robo-advisor. This method makes investing accessible for more people than ever. You don’t need to have any experience or know-how, as the robo-investor takes care of nearly everything for you.
To get started, you’ll just need to answer a few quick questions about your risk tolerance and investment goals. The robo-advisor works by using algorithms to optimize and balance your portfolio, taking the guesswork out of the process.
You can usually get started with less than $500 and low fees. There may be a small annual fee involved, which runs around 0.25%.
4. Give Low-Initial Investment Mutual Funds a Try
A mutual fund is a type of investment that lets you put your money into a portfolio of stocks and bonds with just one transaction. This simplifies the process for new investors.
Traditionally, mutual funds require large initial investments of between $500 and $5000. If you’re willing to invest $50 to $100 automatically each month, there are companies that will waive the minimum requirement.
This is a lower-cost and convenient way to invest in mutual funds. A good strategy is to set up automatic deposit deduction through your payroll.
5. Enroll in Your Company’s Retirement Plan
Finally, if you’re able, it’s a smart idea to invest in an employer-sponsored retirement plan. You can start with very small contributions, even as low as 1%.
You probably won’t even miss that money because it’s taken right out of your paycheck. To make things even more appealing, you’ll receive tax incentives in return for your investments.
Once you’re comfortable, you can begin to raise your contribution each year if you’d like. Perhaps boost your retirement contribution every time you get a pay raise. Some employers even match employee contributions, which can substantially increase your earnings.
Investing is easier and more accessible than ever. The key is to get started. Once you do, you can experiment with new methods and higher contributions.
Over time, you’ll begin to see more impressive results. No longer do you need a large amount of money or expertise to invest. With online sites and app-based platforms at your fingertips, you can start growing your money right away.