You don’t need a lot of money to start investing. Anyone can start small, and they should. If you develop good habits for investing money now, you’ll be in a much stronger financial position down the road.
How to Begin Investing
If you want to become wealthy, you need to hold on to the money you earn and learn how to grow it. The key to making money grow is to start investing into things that offer the potential for profitable returns.
It’s true that investing involves risk of losing money. You can never eliminate this risk entirely, but you can significantly reduce it by investing wisely. Start investing in long term investments, like your retirement account. It’s always a good idea to have extra money for a rainy day, in case something happens and you have a lot of debt registered.
Saving money and investing it are closely connected. Get into the habit of investing a little bit every month, and set up an automatic investment plan. Start with small amounts of money, and increase as you get more comfortable with the process.
Low-Initial-Investment Mutual Funds
Mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds with a single transaction, making them perfect for new investors. They are professionally managed investment funds that pools money from many investors to purchase securities.
Many mutual fund companies require initial minimum investments. Other companies will waive the account minimums if you agree to automatic monthly investments.
Let a Robo-Advisor Invest Your Money For You
Robo-Advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. They are inexpensive and require very low opening balances so that nearly everybody can benefit from a Robo-Advisor.
There are over 200 Robo-Advisors available in the U.S. alone, and more are launching every year. All of them provide some combination of investment management, retirement planning and overall financial advice. They typically charge an annual fee of 0.2% to 0.5% of a client’s total account balance.
Many digital platforms tend to attract and target certain demographics more than others. Check out Investopedia to do some research on Robo-Advisors before you choose one.
Reach Out to a Human Advisor
By eliminating human labour, online platforms can offer the same services at a fraction of the cost. Still, many people prefer human guidance or a combination of the two, especially when it comes to handling their money. Automated services are ill-equipped to deal with unexpected crisis or extraordinary situations, like extreme market volatility.
Human financial planners usually charge a rate of 1% to 2%, and potentially more for commission-based accounts. They usually require a high opening balance in investable assets. If you are a first-time investor with little money to invest, a human advisor might be out of reach.
Markets to Invest Money In
It’s up to you where you want to invest your money. If you are a first-time investor, you might want to start by playing it safe. Invest in great, international companies like Starbucks, Facebook or similar companies that are well-suited for long-term investments.
Anyone with a smartphone and a bank account can be an investor. Start small, and invest more when you see your money grow. Good luck!