A journey of a thousand miles starts with a single step. The same applies to your savings toward a future investment. Many people often think of saving as stashing away huge amounts of money, but this isn’t true.
Savings start with any amount you have, but the most important factor is self-discipline. If you develop good savings habit with the little amount, you’ll have no trouble with large sums in the future.
In this article, we’ll go through 5 easy ways you can use to start investing with a small amount.
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Smart Ways To Start Investing
1. Use the Cookie Jar Technique
Saving and investing go hand in hand. However, the first step is to save the money and this is where many people lose focus. This is because they lack self-discipline while others see it as a long journey.
Nevertheless, you can start small and build up as time goes after you’ve mastered the process. For example, start saving $20 every week. It may seem small at first, but at the end of the year, this will have accumulated to over $1,000.
Furthermore, you can automate the savings process by using an online savings account. You can initiate a standing order which will see the bank deduct a specified amount every week or month.
2. Consider Using Robo-Advisors
While many forums exist such as Investors Hangout where investors can discuss various investment strategies, the introduction of robo-advisors has made it easy to invest. This is possible even without previous investment experience.
Robo-advisors are intelligent systems which monitor the investment environment and your portfolio as well. With the information gathered from the two, it’ll provide advice on what step you should take next. However, you’ll need to dig into your pocket to cover the fees.
3. Get a Retirement Plan
Securing your retirement should be a priority and this you can achieve by enrolling in a 401(k) or any other retirement plan offered by your employer.
After enrolling, dedicate at least 1 percent of your income toward the plan. With time, you can increase the contribution to 2 percent if conditions allow.
4. Invest in Mutual Funds
Mutual funds allow you to invest in bonds and a wide range of stocks with a single fund. This investment provides a safe way to invest since you have diversified portfolios. With varied investments, you avoid losses associated with investing in a single stock or bond.
However, the sole disadvantage of this is many companies set minimum investments at between $500 and $5,000. This locks out beginners with small amounts.
5. Treasury Securities
While this investment will not earn you riches, it’s a great place to hold your money while earning interests until you’re ready to move up the investments ladder.
You can buy Treasury Securities through Treasury direct and they come with varied maturities from as early as 30 days to as long as 30 years. In addition, you can start with as little as $100. Furthermore, you can also buy Treasury Inflation Protected Securities.
These will pay interest and on top of that, they adjust the principal amount based on the consumer price index to protect against inflation.
You don’t need thousands of dollars to start and investing. Similarly, you also don’t have to wait to earn millions so you can start saving. The important thing is to start. In fact, start small and work your way to the top.