Best Ways to Start Investing with Little Money

Best Ways to Invest With Little Money

Investing in small amounts can lead to great gains later on. Just because you don’t have thousands of dollars sitting around doesn’t mean you can’t invest. In fact, many investors started with small incremental investments to build the empires they have today. Teen Finance Tips suggests you don’t put it off. You can start investing with as little as $50 per month. The key to amassing your wealth is to build long term good habits with your finances – like actually putting money in your savings account or under you mattress every week.

Start your new habit of investing, today, and you’ll be much happier tomorrow or in the future when you’ve placed yourself in a much stronger financial position. If you don’t believe us, check out some of our tips below for how you can start investing with little money or learn how you can start investing as a teen.

Cash Savings

Have you ever heard of the cookie jar or hiding money under your mattress? Those are really no joke and they work. If you look at any investor or aspiring investor and look back at how they handle their money – there is a high chance they save, and save often. You’re probably thinking this will take you years to build up enough cash reserves to make that first big investment – you’re wrong. Maybe you should put that Starbucks cup down and listen.

If you buy a Starbucks coffee and sandwich every day you’re likely spending $5-8/day. You’re probably thinking what the hell does $5 matter now? I can’t do anything with it… again you’re wrong. Take that $5/day and look at how much it could be over the course of a year, don’t worry we did the math for you it’s $1,825. With that kind of money you can put a sizeable investment into your favorite stock, mutual fund, 401k, or even a simple CD from a bank. The point is, this all makes money while your Starbucks visit doesn’t.

The hardest part about building up a savings is the habit of actually doing it. If you don’t make an effort to save each week or day then you won’t ever do it. This is step one in how you can be a better investor and be in a better spot financially. Try to balance out your life so that you live just below your means and take that extra money and save it.

This is not the easiest way but it is the most effective way to start building those reserves to invest.

Retirement Plans – AKA Your Company’s 401k

This is a no brainer. I wish I started this back when I was 18 instead of trying to get one started in the mid 20s. I would be sitting with at least $15-20k by now instead of my measely $2k. You don’t have to invest much and I personally use it as alternative savings account. Instead of putting money into my savings I dump it into my 401k pre-taxed, so I get more bang for my buck now.

You may be lucky as some employers actually match what an employee contributes so we would suggest you speak with whomever is in the business department for your company. Pretty much every company offers some sort of retirement plan – I would be shocked if they didn’t. You can increase and decrease your contribution as you go but ultimately the more you put the more you get out later.

Mutual Funds The Way

These have been said to be perfect for new investors as you can invest into multiple stocks in one go. These do have a slight initial startup anywhere from $500-5,000 but if you have the money – they are worth. There are quite a few out there that waive these minimums to start a mutual fund but require you to contribute a monthly investment.

Mutual funds survive off of automatic investing but it’s not that common to see many users do so with taxable accounts. If you can do an automatic investing option through payroll that is highly suggested.

Treasure Securities The Safe Route

These securities will never make you rich, lets just get that out there now. But with that said they are a perfect way for a beginner to stash their money and gain a very little bit of interest to pull out later. These are good if you want to just offload the cash to not spend it and saving up for future investments that are much higher value.

Stocks

These are the granddaddy of all things investing, in our opinion. These offer the highest risk possible to losing your money and there are tons of different routes or types of stocks you can target. Some of our personal favorites are penny stocks or stocks with a sell price under $2. Something you can take $200 with and buy in large quantities and then sell as soon as the price jumps. The whole idea of working with these lower price stocks is the volatility so you have to be paying attention throughout the day to really get your money’s worth.

The other way you can use stocks is by looking at dividends. There are some stocks where you can buy shares of (like Verizon) and slowly build up wealth. These are good because you can add $5 or $500 dollars to your shares and they will buy stock whenever your account reaches the sale price of that stock. These are great if you’re trying to invest weekly and are usually pretty stable but you should always be cautious when investing. Something like dividend investing can be a great long term investment opportunity that you can offload whenever you want and walk away.