Did you know that millennials are decent at saving but not at investing?
Interested in investing but don’t have a lot of money? Not to worry! We’re going to cover a few ways to start investing your money, even as little as five dollars’ worth. Some apps help you save money over time.
Want to learn more? Keep reading to find out.
How to Start Investing: A Guide
If you want to invest, you can start as early as today even with a small budget. If you have a little bit of money, you can get creative and invest.
1. Invest Your Spare Change
Did you know that you can invest loose change through an app called Acorns? You don’t need a balance to open a new account. When you connect your credit or debit card, Acorns will round up and invest your spare change.
For example, if you buy a cake for $5.75, Acorns will round it off to $6 and invest the extra 25 cents. To add to this account, you can set up recurring investments weekly, daily, or monthly.
2. Piggy Bank Approach
Investing and saving money go together. To invest money, you need to save some up. Don’t worry, this will take less time than you think.
Put away $10 per week. In a year, you could have over $500. Put the ten dollars into a shoe-box, small safe, or envelope. To get creative, put it in a piggy bank and forget about it.
By getting in the habit of putting away money, you will start to build savings.
3. Worthy Bonds
You could invest in a company called Worthy. Worthy sells Worthy Bonds with a fixed 5% annual interest rate. Each bond costs only $10. You can sell your bonds anytime, penalty free.
This is the electronic equal of a piggy bank is the online savings account. It is separate from your checking account. You can withdraw money two business days. It’s not linked to your debit card.
When the cash is significant, you can take it out and invest in something more meaningful.
4. An Automated Investment Platform
Betterment is a platform that invests your money. It’s cheap and easy to use. When you invest your money with this platform, the site creates a portfolio for you. It includes several exchange-traded funds.
Betterment has you complete a short questionnaire. This helps it figure out how to invest your money. Investment management’s done by the platform. It’s not a do it yourself account.
This is a perfect platform if you’re new to investing. It also is a good choice if you don’t have a lot of money.
Betterment handles the investing, and there isn’t a deposit amount to open an account. You could contribute as little as ten dollars at a time.
5. Employer’s Retirement Plan
Are you on a tight budget? Invest in an employer-sponsored retirement plan. You can do this with amounts so small, it won’t trouble you
You can always increase this each year. With a pay raise, your increased contribution won’t be noticeable. Your employer may even provide a matching contribution.
6. Set up a Retirement Plan
Even if you don’t have an employer-sponsored retirement plan, you can set up your own. All you need to qualify is income you’ve earned.
You can choose a traditional IRA or a Roth IRA. Any returns on investment that you receive are tax-deferred. This lasts until you withdraw in retirement.
Contributions to an IRA are tax-deductible. Roth IRA isn’t tax-deductible. Withdrawals are free from taxes as long as you’re 60 at the time and had the plan for five years.
7. Invest in Your Skills
Are there any new skills you could get, bringing you to a new level in your career? Learn a foreign language, a sales course, or a new computer application.
Even a public speaking course could help you, depending on what profession you’re in.
By acquiring career-enhancing skills, you could get a promotion on your current job. You might even get to transfer to a better paying position with a different employer. It costs a few hundred dollars to take a course and gain a new skill.
8. Low-Initial-Investment Mutual Funds
Mutual funds let you invest in a portfolio of bonds and stocks with one transaction. This is perfect for new investors.
Many mutual fund companies need an initial investment anywhere from $500 to $5000. If you’re a new investor with little money to spare, those minimums may be out of reach.
Some mutual fund companies waive this amount if you agree to monthly investments.
Automatic investing is a regular feature with these accounts. This is convenient if you do it with payroll savings. Set up an automatic deposit situation with payroll.
You could ask someone in your human resources department to organize this for you.
9. Treasury Securities
This is an excellent place to invest your money and earn some interest. This will provide you with money for down the road when you are ready to go into higher risk investments.
These are also known as saving bonds. You can buy fixed income US government securities with maturities from 30 days to 30 years.
Or, if government securities are too boring for you and you want a little more risk, there’s always investing in good old regular stocks. It’s harder to find cheap stocks in the traditional stock exchange, but we’ve done some work for you already. Here are the best stocks under 5 dollars!
Want to Learn More?
We hope you found this article helpful on how to start investing. You can begin investing even with a little bit of money, and over time, you will gain a good chunk of money.
Want to read more about finances? Check out this article we wrote about stocks for beginners. Further, If you’re interested in learning more about investing your money for outsize returns, check out this article on the best ways to invest $10,000.
Author: Cathy Carter