Investing is not just for rich people. Anyone can do it, even if you only have $100 or less to spare. Many people are intimidated by the process, but you can start slow and learn as you go along without taking too many big risks unless you want to. Keep the points below in mind.
Prepare
There’s no point in investing if you are drowning in debt or struggling to make ends meet. At the very least, you should pay off high-interest debt. The general rule should be that you are not paying more interest on debt than you are earning on your investments. The reality of this is a little bit more complicated, and if you are genuinely having trouble paying your debts, you should look at strategies for doing that. However, if you just have some credit card bills to pay down, some student loan debt and a mortgage, you are in the same position as many people looking to invest.
You should start by paying off your high-interest credit card bills. As for your student loans, in just about two minutes, you can find out whether you can apply for a lower rate by refinancing. This could shorten your loan payments by years. As long as you have reasonable rates on your student loans and your mortgage, investing while paying these off is not necessarily a bad idea. You do need to set aside some emergency savings because you don’t want all your savings tied up and difficult to liquify in an emergency.
Time to Get Started
You don’t have to have your goals firmly in place before you decide what to do with your first $100. In fact, it may be best to take a casual approach to start with, treating the process like a game. You could buy stocks directly online, including what are called fractional stocks. These allow you to buy just part of a share, meaning you can get a small piece of a big company for just a few hundred dollars. There are apps that can help you get started buying individual stocks. If you want to make the leap into getting a fairly low-risk and diversified portfolio, using a roboadvisor is one of the best ways to get started.
Goals & Approaches
Once you’ve had a taste of investing, you do need to sit down at some point and consider the bigger picture. This means identifying your goals and figuring out what kind of an investor you are. How hands-on do you want to be, and what is your risk tolerance? You should already be putting money away in your employer’s retirement plan. Your goals may include early retirement, paying for your child’s college education and purchasing a home. It might be important to you to create wealth that you can use to set up a charitable foundation, or perhaps you want to ensure that your children and grandchildren never have to worry about money. The earlier you start the better, but it’s never too late to dip a toe in the investment waters.