How to Start Investing in Stocks with Little Money in 2020.
- If you are searching for “ How to Start Investing in Stocks with Little Money in 2020” this page is all you need. Explore.
A lot of people put off investing because they think you need a large sum of money to start investing. This is just not true. You can start investing with a little amount per month. The key to having wealth is developing good habits like always putting money away every month.
If you start making an investing habit, you’ll be in a much stronger financial position. In this article, we will be focusing on how to start investing in stocks with little money. In this article, we will be emphasizing on how to start investing in stocks with little money.
How to Start Investing in Stock with Little Money
1. Try the Cookie Jar Approach
Saving money and investing it is nearly connected. In order to invest money, you first have to save some up. That will take a lot less time than you think, and you can do it in very small steps. If you’ve never been a saver, you can start by putting a little money each week.
Try putting the money into an envelope, shoe box, or even that legendary bank of first resort, the cookie jar. Though this may sound silly, it’s often a necessary first step. Get yourself into the habit of living on a little bit less than you earn, and stash the savings away in a safe place.
Start with small amounts of money, and then increase as you get more comfortable with the process. It may be a matter of deciding not to go to McDonald’s or passing on the movies, and putting that money into the cookie jar instead.
2. Let a Rob Advisor Invest Your Money for You
Rob advisors were created to make investing as simple and accessible as possible. No prior investment experience is required and set-up is easy. Let their automated intelligence track your investments in the background, and pay lower fees in the process.
You can start investing with a minimum of $100. If you’re starting out with less than $100, you may want to consider a different rob advisor like Betterment, which has no minimum starting balance whatsoever. Like M1, it’s also great for beginners as it provides a super simple platform and a hassle-free approach to investing.
3. Enroll in Your Employer’s Retirement Plan
If you’re on a tight budget, even the simple step of enrolling in your 401(k) or other employer retirement plan may seem beyond your reach. But there is a way that you can begin investing in an employer-sponsored retirement plan with amounts that are so small you won’t even notice them.
You probably won’t even miss a contribution that small, but what makes it even easier is that the tax deduction that you’ll get for doing so will make the contribution even smaller.Once you commit to a 1 percent contribution, you can increase it gradually each year. For example, in year two, you can increase your contribution to 2 percent of your pay. In year three, you can increase your contribution to 3 percent of your pay, and so on.
4. Put Your Money in 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. The trouble is many mutual fund companies require initial minimum investments of between $500 and $5,000.
If you’re a first-time investor with little money to invest, those minimums can be out of reach. But some mutual fund companies will waive the account minimums if you agree to automatic monthly investments of between $50 and $100.
An automatic investing arrangement is particularly convenient if you can do it through payroll savings. You can typically set up an automatic deposit situation through your payroll, in much the same way that you do with an employer-sponsored retirement plan. Just ask your human resources department how to set it up.
5. Play it Safe with Treasury Securities
Treasury securities, also known as savings bonds, are easy to buy through the US Treasury’s bond portal Treasury Direct. There you can buy fixed-income US government securities with maturities of anywhere from 30 days to 30 years in denominations as low as $100.
You can also use Treasury Direct to buy Treasury Inflation Protected Securities or TIPS. These not only pay interest, but they also make periodic principal adjustments to account for inflation based on changes in the consumer price index.
And as is the case with mutual funds, you can also arrange to have your Treasury Direct account funded through payroll savings.
Summary
There are lots of ways to start investing with little money, with lots of online and app-based platforms making it easier than ever. You just need to start somewhere. Once you do that, it will get easier as time goes on, and you will love yourself for it.
NG Team.
