Have you ever found yourself thinking you do not have enough money to make even a small investment? Many entrepreneurs and individuals have this same mindset. However, for amounts as low as $50 a month, you can make a great investment. By putting a little money away every week or every month, your financial future will be more secure.
The information provided for you here is five simple ways to make any type of investment for a minimal amount of cash, but in the long run it will pay off nicely for your finances.
1. Utilize Technology by Having a Robo Advisor
Many investment and brokerage companies now utilize robo advisors for their investors. As technology updates frequently, one of the most useful pieces of that technology for investors is to hire a robo advisor to help with your investing journey. You don’t even need to have any past investing experience to use one. They are specifically designed to aid with investments, making them as easy and understandable as possible even for beginning advisors. Should you choose to employ the services of a robo advisor, let it be known that you will pay lower fees than you would investing the old-fashioned way. Their artificial intelligence will help you track your investments, whether you have one investment or multiple ones.
Top Companies with Robo Advisors
Fidelity Go — They charge what is called an advisory fee of 0.35%. There are no hidden fees, trading fees, transfer fees, and no commissions with Fidelity Go. Your minimum balance must be $100 to get started also. They estimate their monthly total cost to you at around 0.03% based on the $100 you need to have in your account.
M1 Finance — You must have at least $100, this is their minimum balance amount to get started. Their services are easy to use, and they also have pre-made portfolios that you are allowed to peruse through before making your final decision.
Wealthsimple — At Wealthsimple rates vary between .50 to 0.40% dependent upon the size of your investment portfolio. Your first $5000 is managed for free, and for accounts up to $100,000 you will pay .50% annually. When you go over the $100,000 amount, your feesl will decrease and more features will be at your disposal.
Betterment — They are known as the oldest robo advisor company that is still in business. Their business has over $13 billion in assets that are currently managed by the company. Annual fees range from .25% to 0.40%, and they offer a free year of investment management depending on the size of your initial investment. They are also the largest independent robo advisor firm around and require no minimum balance to begin,making them rather popular with new or beginning investors.
Personal Capital — Not only do they offer a mix of human and robo-advisors, but you will get a mix of robo-advisor and human advisor to help you. Many people are more comfortable with such interaction since they do not only have to deal with the computer generated platform. Their pricing is a bit higher than other robo advisors because they offer the human touch. As an example, if your portfolio is $1 million, you will pay .89% annually for their services. For portfolios above $1 million, prices will go down some.
Ellevest — This company may be the best bet for female investors. Their beginning price is .25% for investments up to $50,00, if you reach the $50,000 mark, you have the option to upgrade for premium services including the use of financial planners or executive coaches.
2. Stash Your Money in the Cookie Jar
Not to state the obvious, but to make any sort of investment, you need to have money saved up to move forward.Dependent upon the type of investment you are considering, it may take a little time to put money away for investing, but it’s not as difficult as you might think. Saving money to many people is hard, especially in a world where much of society works paycheck to paycheck.
To give yourself a head start, try putting at least $5 a week away in the cookie jar, coffee can, or an envelope, and put it somewhere it cannot be accessed easily. $5.00 a week adds up to $20-$25 a month, and
$25 a month adds up to around $300 for the year. While it may not seem like much, if you invest it wisely, you can enjoy the benefits that it will result in.
Nowadays, there are several online banks that you can open a free savings account with. A popular one is the American Express National Bank, they offer a no minimum deposit savings account to customers. Their accounts also do not come with maintenance fees, like many physical banks do. They also offer their customers the option of investing their money into a CD, Certificate of Deposit, and their CDs have a higher yield than their regular savings accounts. This option is a great idea if you are looking to receive higher interest rates on your cash.
Once you stash your money into the cookie jar, envelope, coffee can or some other apparatus to hide it, make an attempt to live on less money than you normally live on. After you get a little bit of your savings put away, consider opening an online savings account. This would be separate from your normal bank or checking account, and the two do not need to be linked. Think of it as having two separate accounts, one primary account that you use for your daily expenses, and one you are trying to build up by adding money to it and not spending it.
Even after all of this, never invest your money into something that is over and above what you can afford comfortably because it can lead to financial instability in the future.
4. 401K and Other Retirement Plans
Many employers offer a retirement plan, 401K plan, that you can invest in per pay period. Even a small amount can add up when you invest it. Some people only invest 1% of their paycheck into their 401K plans, but just like with saving your money, it adds up over time, especially if your employer matches your contribution.
On top of saving money, you also get a tax deduction for contributing to the retirement plan. The deduction that you receive, will make your contribution even smaller and you’ll hardly notice it missing. You are allowed to increase your contribution annually if you chose to do so. Some companies require a specific amount to be taken out of your check per pay period, check with your human resource department to find out what options are offered through your employer.
5. Treasury Securities (Savings Bonds)
Although it isn’t common for new investors to begin their investment journey with Treasury securities, it can be done. Of course, you will not get rich with such an investment, but it is a great place to put your money into. You can also earn interest with savings bonds, until you are ready to move onto bigger and better investments.
They are easy to buy through the US Treasury’s bond portal called Treasury Direct. You can buy fixed income US government securities with maturities that run from 30 days to 30 years, depending on your personal needs. You can do this with a minimum of $100.
Treasury Direct also has what are called Treasury Inflation Protected Securities, TIPS for short. These also pay you interest, and they make periodic principal adjustments to cover the cost of inflation based on changs in the consumer price index.
Additionally, you can also arrange to have TIPS taken directly out of your paycheck. Again, be sure to check with your human resources department to see what is available to you.
There are many other ways to begin investing with small amounts of money, these five are just the tip of the iceberg. But, remember, everyone has to start somewhere, and once you begin investing, it will become easier over time and you will reap the benefits of investing your hard-earned money.
5. Using a Low-Investment Mutual Funds Account
As a new investor you may find that investing in mutual funds is more beneficial to you. Mutual funds allow you to invest in a variety of stocks and bonds with a single transaction. The downfall with mutual fund companies is that many of them require a minimum of $500 to $5,000 at their initial start up, but some of them will waive your startup minimum when you agree to automatic monthly payments.
A common way of investing in low initial mutual funding is by automatic investing, check with your human resource department to see if this is an option for you. The most convenient way of automatic investing is to have it drawn out of your paycheck every pay period. Keep in mind that automatic investing is less common with taxable accounts. It is much more common with mutual funds, ETF, and IRA accounts.