If you are not familiar with investing, starting can be kind of scary.
I’m sure you have also heard the old saying “make your money work for you.” But what if you are too busy working FOR your money? You might forget about the basic Finance 101 of actually investing it.
When I first thought about investing, I pictured walking into a giant, marble-laden building with gold lion statues at the entrance. Meeting with some stiff in a suit asking me for a check for thousands of dollars that I had no idea where he was going to put it.
When you start researching investing and hear terms like a diversified portfolio, bonds, asset allocation, it can make your head spin. But investing doesn’t have to be just for the rich, nor do you need to carry a dictionary of financial terms around! Anyone can be an investor-even with just a few bucks.
Before you start investing, take this into account first…
When you are looking into investing, there are a few things that you need to consider…
- How much you can afford to invest (whether it’s $5 or $500, you gotta start somewhere)
- Your budget
- Your financial goals
- Your capacity for risk
So, in this post, I offer an overview of what you can do to start investing, rather than a personalized and tailored plan. If that is what you are really looking for, you will need a financial advisor for that.
BEFORE you start down your investing journey, you need to make sure you have any leaky holes plugged up.
- You should have an emergency fund established, of at least $1,000 if not the ideal minimum of 6 months of living expenses.
- You should have your debt paid off.
If these two holes are not plugged, you can still technically invest, however, you might want to address the previous points first. It can be very difficult to spread your money thin if you are trying to do all at once or losing money through increasing interest rates from debt.
You might already be investing without even thinking about it. Remember that 401(k) paperwork you filled out when you first started you job-yup that’s investing! See, it doesn’t have to be scary.
Invest-Based on your Budget
Like I said before, you don’t need to already be rich or inherit thousands of dollars to start investing.
There are ways to start investing today with just the change in your bank account. Here, I will review a few different platforms to start investing based on your budget.
Got some change to spare?
Have you ever been to the grocery store and they asked if you wanted to round up your purchase and donate the change to a charitable cause? Do you have any idea how many donations they can rack up that way?! A TON!
You can apply this same principle to investing.You can start investing even with your spare change! Click To Tweet
And what easier way to invest your extra change than with a simple app and a few taps on your smartphone? Acorns does just that. It takes the extra change from your purchases and invests them.
Simply download the app here, enter in your info and you’ll be able to pick your portfolio based on a few criteria-your age, income level, and aggressiveness.
*A general rule of thumb is the younger you are the more aggressively you can invest as you have more time to recover from any loses.
After you pick all your parameters, Acorns figures out the rest. It even takes out the stresses of picking individual investments and does it all for you.
So how does it actually work? When you make purchases, your transactions are rounded up to the nearest dollar amount. When the amount hits $5, it gets put into your investments.
How much is this investing going to cost you? There is a monthly $1 service fee. If you are investing over $5,000 then you will be charged 0.25% of your balance for the year.
Got $5 bucks laying around?
Another awesome investing app is Stash. It only takes $5 to get the ball rolling.
How does it work? When you sign up, you will have access to more than 30 options to invest your money. Plus, you know your money will be safe because Stash is a SEC-registered investment advisor.
If you sign up and are feeling overwhelmed by financial jargon, don’t be. Stash has personalized assistance to help walk you through everything. You can even pick and choose where to invest based on what you can afford.
So how much does it actually cost? Just as with Acorns, you will be charged a $1 per month fee-although the first 3 months are FREE! Same with Acorns, if you get up to $5,000, you’ll be charged 0.25% fee per year.
Got an extra $100 laying around?
Want your money to work for you and the environment? Then check out the FREE Summit Checking Account and their investing platform Aspiration Redwood Fund. Aspiration invests your funds in sustainable businesses, so go ahead and feel good about yourself and being a socially responsible person!
You only need $100 to open up an account with Summit. Any additional service fees are totally up to you.
Instead of gouging you with fees and taking your precious returns, Aspiration takes a different approach. You decide how much you pay your portfolio manager. Go ahead and check it out here.
The Beginners Guide to Investing!
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Got a little more to start with?
With $500, you can open an Ally Invest account. This provides flexibility and has self-directed trading tools.
If you are a little more comfortable with the stock market, this is a great choice. Ally lets you buy stock from companies that you choose and invest as much or as little as you want.
Bonus-there is no minimum balance to open an account. Although you do need to make a purchase of at least $100 when opening your account to start your investment train.
It is always wise though to ask a professional when you have questions about your investment options. Investing is a very personal decision and does normally require a personalized plan.
But with the options listed above, anyone can start investing on any budget, so why wait?!
How have you started investing on a budget?
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