You may think that because your paycheck is stretched thin enough as it is, you don’t have anything left over to contribute to an investment fund. Rather than let this serve as a barrier to getting into the stock market, it’s better that you take a different approach and work with what you have without going to extreme measures. Here are a few ways you can invest when you don’t have much money.
Put Back Money Here and There
Whenever you have a few dollars, stash them away in a jar or piggy bank, rather than eat out, get a cup of coffee, or buy a soda from the machine at work. If you use your card more often than you use cash, there are apps that can round your purchases up and invest the leftover change for you. This may seem like a slow way of making investments in the stock market, but you may be surprised at how quickly it all adds up when you really commit to making a conscious effort.
Look Into Roboadvisors
Like practically everything else in our modern world, you can automate investing. Roboadvisors make it a breeze to get into the stock market without having much prior knowledge of the market. One thing to bear in mind with roboadviors is the fact that some of them do have high starting balances, and you also want to know what you can expect in regards to fees. That said, there are plenty of services that don’t require a high starting balance.
Look for ways to get as much of your money managed for free. For instance, setting up automatic deposits, getting friends to join the service and taking steps to make your account more secure can increase your free money management limits.
Opt for Index Funds Rather Than Stocks
Instead of making investments in stocks, it’s better to choose index funds if you don’t have much in the way of money. This is because there’s a lot of risk in choosing a single stock, as opposed to an index fund. The way index funds work is that you own stock in several different companies, diversifying your portfolio, which is exactly what you want to minimize your risk over the long-term.
Eliminate Fees As Much As Possible
Just like interest is a waste of money (at least when you’re paying interest rather than receiving it), the same is true when it comes to an index fund and stock fees. Before you choose a fund or roboadvisor, get a breakdown of what you’ll be looking at in terms of fees. You don’t want the money you’ve worked so hard to save to be spent on fees rather than put into an investment that makes you money rather than costs you money.
Take Care of Your Debt
How much money would be able to free up if you were debt free? If you can’t increase how much money you have coming in, maybe you can take steps to reduce the amount going out. Do what you can to pay off your debts as much as possible, then turn your financial attention on making investments in the stock market.
You may be surprised at how well you do in the stock market when you don’t have that much to invest. It’s all about educating yourself and making a plan you know you’ll stick to.
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