Let’s talk about your investment portfolio. What? You’re not investing!? (It’s okay, no judgment here.)
Most people put off investing because they believe it takes a lot of money or it’s just too complicated. Neither is true. So, here are a few tips for easy investing with only a little money.
Not enough is just enough
You may think your budget is too tight, but it doesn’t take thousands to begin investing. Start with small steps. Save a little at a time. You can start by actually putting $10 a week away in a shoebox, envelope, safe or even a cookie jar. Just don’t dip into it, and in a year you’ll have over $500.
The electronic version of the cookie jar is an online savings account connected to your checking account, such as an MCU Ultra Checking or Checking Plus account. Start small and increase as you’re able. When the stash is big enough, you’ll be able move it into some actual investment vehicles.
Do it on the job
As we mentioned in our last “Heads & Tails” post, an employer-sponsored retirement plan, such as a 401(k), is an excellent way to save and invest. The great news is that you can have small amounts withheld, even just 1 percent of your salary, but because of the tax deduction you get for 401(k) contributions, the actual effect on your take-home pay is even less than 1 percent. Increase the amount with pay raises, and if your employer provides a matching contribution, all the better.
Invest your time elsewhere
When you have a little more to invest, you still may not have the time to spend learning about all the options. Stocks, bonds, commodities, currencies, REITs … the list goes on and on. Fortunately, you can do just fine without being an investment expert. Online automated portfolio management services, sometimes called robo-advisors, use computer algorithms to create investment plans based on your answers to a number of questions. They are great for those new to investing without a large amount to open an account and those who don’t want to spend a lot of time picking individual stocks.
Betterment and Wealthfront are two sites that offer robo-advising options. Both helped pioneer the industry and are good solutions for many investors. Both also offer low management fees with no, or small, account minimums.
How soon is now?
Your good intentions don’t earn interest or dividends. The most important thing about investing is actually starting. So do it. Start building wealth through good habits – budgeting, saving, etc. Make investing a routine now and you’ll be in a much stronger financial position down the road.