How You Can Start Investing with a Small Amount of Money

One of the main reasons many people avoid investing in a potentially profitable venture is due to a perception that doing so requires a significant amount of money. This couldn’t be further from the truth. Investing, even in small amounts, can reap big rewards. The key, as with any successful trait, is starting early and doing some homework. If you start now, you’ll be in a better position for scoring a return on your investment.  

Please contact us if you have any questions about how to go about investing and what to consider when doing so.

Start Saving Slowly

In order to start investing, you’ll need to start saving - even in small amounts. This may be something you aren’t used to hearing, but consider living on less than what you earn and save the difference. Our savings accounts come in a variety of options to fit a variety of needs. Ask us about them today! Once you’ve saved enough, you can start thinking about investing.

Your Employer's Retirement Plan

Start thinking about enrolling in your employer’s 401(k) retirement plan if one is available. You can start investing in this plan even with small amounts. Start with a 1% contribution and increase it every year thereafter by another percent (2% the following year, 3% the year after, etc.).

Set Up Your Own Retirement Plan

If you’re currently unemployed or have a job without a retirement plan, think about creating your own. All you need is earned income. Two great options are Roth IRAs and traditional IRAs. Just like an employer-sponsored retirement plan, if you withdraw any funds, they are tax-deferred until you retire.

When you contribute to a traditional IRA, there will be a tax deduction while Roth IRA contributions are non-tax-deductible. The caveat here is that you must be at least 59 ½ years old at the time a withdrawal is made and have participated in the plan for at least five years. While there may not be an employer matching the contributions, a self-directed Roth or Traditional IRA can have vast investment alternatives. Remember, you can contribute up to $5,500 per year to both IRA types ($6,500 if you’re 50 and over).

Consider a Low Investment Mutual Fund

New investors are fond of mutual funds. These are investment securities that allow one to invest and manage stocks and bonds with a single transaction. The entry fee is quite large, however, and can range from $500 to $5,000. Yet, some mutual fund companies will allow you to start with a low amount if you agree to invest monthly. Automatic investing is more common with IRA accounts and mutual funds. Consider the convenience of automatic investing through automatic transfers via payroll transfers.

Our Investment Services Can Help

Don’t be discouraged if you have little money set aside for an investment. There are many ways to start, and now in the world of investment apps and online information, everything is at your fingertips. The point is to start somewhere. You won’t build a solid foundation to retire on if you spend your money away on things you don’t need. Contact our Investment Services for professional guidance and help today!