A journey of a thousand miles begins with a single step. The same applies to your savings for future investment. Many people often think that saving is hiding huge sums of money, but that is not true. Saving starts with any amount you have, but the most important factor is self-discipline. If you develop good saving habits with the small amount you have, you will not have problems with large sums in the future. In this article, we will go through 5 simple ways you invest even with just a small amount.
Smart Ways To Start Investing
1. Use the Cookie Jar Technique
Saving and investing go hand in hand. However, the first step is to save money, and this is where many people lose focus. This is because they lack self-discipline, while others see it as a long journey.
Nevertheless, you can start small and build up over time once you have mastered the process. For example, start by saving $20 every week. This may seem small at first, but by the end of the year this will have added up to over $1000.
You can also automate the savings process by using an online savings account. You can initiate a standing order where the bank deducts a certain amount each week or month.
2. Consider Using Robo-Advisors
While there are many forums, such as Investors Hangout, where investors can discuss different investment strategies, the introduction of Robo advisors has made investing easy. This is also possible without prior investment experience.
Robo-advisors are intelligent systems that monitor the investment environment and also your portfolio. They use the information they gather to advise you on what step to take next. However, you will have to dig into your pocket to cover the fees.
3. Get a Retirement Plan
Ensuring your retirement should be a priority, and you can achieve this by signing up for a 401(k) or any other retirement plan offered by your employer.
Once you have enrolled, dedicate at least 1 percent of your income to the plan. Over time, you can increase the contribution to 2 percent if conditions allow.
4. Invest in Mutual Funds
Investment funds allow you to invest in bonds and a wide range of equities with a single fund. This investment offers you a secure opportunity as you have diversified portfolios. With diversified investments, you avoid the losses associated with investing in a single stock or bond.
The only drawback, however, is that many companies set minimum investments between 500 and 5,000 USD. This excludes beginners who only have small amounts.
5. Treasury Securities
While this investment will not bring you riches, it is a great place to keep your money and earn interest at the same time until you are ready to climb the investment ladder.
You can buy Treasury securities directly through the Treasury Department, and they are available with varying maturities from 30 days to 30 years. In addition, you can start with as little as $100. You can also buy inflation-linked Treasury securities.
These earn interest and also adjust the principal amount based on the consumer price index to protect against inflation.
You do not need thousands of dollars to start and invest. Likewise, you do not need to wait to make millions to start saving. The most important thing is to start. Start from scratch and work your way to the top.