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How to Start Investing With a Small Amount of Money

In life, there are instances when you wish to start investing but do not know how, when and where to get started.

Sometimes the thought of investing itself intimidates you. And, you get a feeling for you to be successful, you need a six-figure to start with.

Well, in the modern day era things are quite different.

You can start investing with as little as $1 and make a 4-figure by the end of the year thanks to technology.

All it takes is for you to take the first step and START.

Let me show you how.

1. Start Investing in fund firms offering low minimums balance

Have you thought of investing in no-load funds to take advantage of the high returns at zero costs?

Most people would love to invest in big no-load fund companies like Vanguard. Often, the companies you are eyeing require steep minimums investments which you may not have.

However, there are lots of no-load fund families out there that allow you to start investing with their low minimums offering.

Some scrape their minimum in that you can start investing from as little as $100. It gets easy for those with little budget to start investing without straining their budgets.

No-load funds cost very little compared to the real mutual funds. this fact makes them a lucrative option for starters on the investment ladder.

They do not charge commissions, loads or any other hidden costs. It therefore gets easy to start investing with no load funds. Even for those just starting out.

All you have to do is get the company that offers low minimums commensurate to your budget, signup an account and get started.

You can spare $100 every month and you never know how much it would have compounded into in the next few years.

2. Utilize investment apps

Micro-investment apps have become very popular these days. Why?

Because the idea of investing a small amount of money at-a-time makes more sense in many people on a tight budget.

If your budget is tight and cannot allow you to invest $3k on treasury bonds, you can start with investment apps and still be successful.

How Investment apps work

Micro-investment apps allow users to save small amounts of money at a time. Thereafter, the money is invested in stock portfolios. These portfolios guarantee greater earnings.

How to start investing with investment apps.

Step 1: Download the app

You can find the in the app store, play store and in form of desktop apps.

The simplest method is to get the apps straight from their page.

Step 2: Connect your bank account and cards

Once downloaded, you will have to set it up and optimize it.

The process is simple and involves linking your bank account and any other cards you use in an intuitive interface, which is as easy to you..

Step 3: Start saving

Once you have liked your cards and bank account, you ready to start saving.

The apps make the art of saving easy.

The whole saving plan is passive and automated.

Step 4: Savings are invested automatically

The amount saved is invested in the stock market. You benefit from the saved amount and the dividends accrued from the stock market.

Here is an example

When you make a purchase with your card, Acorns rounds up the after-change to the next dollar and saves the difference in your account. The balance is then invested in stock that earns dividends.

Picture this, for your $6.10 latte, Acorns round it up to $8 and saves the $0.90 difference into your account.

And, for 5 lattes (you and your bae) and 5 other card transactions a day, get you $270 savings in a single month. Therefore, it translates to $3,240 a year in the minimum.

We have not factored in the value of appreciation of your investment.

You will end up saving more money than you can imagine. The money is then invested right away to earns you interest.

Imagine what $3,240+ can do to your life.

The whole thing happens in the background without your knowledge once set up. The process keeps repeating itself every time you buy a cup of coffee, order lunch and many other recurring purchases.

Why investment apps work

Micro investing apps work for reasons that include:

Reason #1: It does require you to strategically save

It just happens without your knowledge once set up. Your spare change becomes your savings.

Reason #2: You set it and forget it

You set it and forget it. Once set, it runs in the background.

You can check how much you have accumulated through their beautiful reporting interface.

Reason #3: You don’t need a lot of money to get started

In fact, you don’t need any money to start. The set up is free. You set it and forget it.

And, you benefit from passive saving and compounding of your invested savings.

In summary:

  • Investment apps allow you to save pocket change passively. The money is then invested in portfolios that earn you the highest return.
  • The apps help you to save and invest at the same time.
  • You don’t need any money to start investing. Download the app, set it up and you are good to go.

3. Buy stock direct

There are instances where you desire to be a shareholder of some company.

You trust the company and believe its future is bright. And, the value of your shares will double or increase 10 folds in a few years to come.

The normal process of buying shares will be through a broker.

It is and has always been complex and expensive. You have to hurdle through a lot of barriers (high minimums and exorbitant fees) before you become a shareholder.

Direct shares purchase plans offer a chance to bypass all this.

How to buy direct stock

You have to follow 3 simple steps in order to buy direct stock plans.

Step 1: You open a bank account

Open an account at your desired bank. The account has to be new and solely for the purpose of buying shares.

You can open one with the traditional bank or online banks.

But I would suggest you go for an online bank account.

It does not only offer better terms but also convenience.

Step 2: Make monthly deposits to the bank account

Make monthly deposits to the bank account you opened above. The amount you will deposit will depend on your financial ability.

Deposit an amount that feels convenient for your situation. However, the amount should align with your financial goals.

The more you contribute the more shares you get when they are still cheap.

Step 3: Buy shares

This step is automated by the company you are buying shares from.

Once you have opened a bank account and deposited some cash, you are set.The company will check your account every month and transfer any money found in it to buy shares on your behalf.

Once successful, you will get a receipt summarizing the whole transaction. It is that simple.

Make sure to increase your shares while they are still undervalued.

This puts you in a position of strength where you stand to benefit the most when the share price value hits the roof.

It is how billionaires –the likes of Jeff Bezos, are made in the stock market.

As for your case, you can small and grow over time as your shares multiply in value.

How to start investing when I have less money

No issue. You still can be a shareholder with as little as $50 dollars.

Direct stock purchase plan offers a chance to buy companies stock with any amount of money you have.

You can actually buy a fraction of a share at a time!

Here is an example.

Let’s say you want to be a shareholder at Space X. And, you re convinced its share will rise soon because of the projects they are about to launch which you believe will be a success.

If Space X stock is currently valued at $100 a share. Through direct share purchase plans, you can buy half a share at $50. How easy!

Benefits of direct stock purchase plan

As opposed to the traditional share purchases through brokerage firms, direct stock purchase plan has more benefits for those who want to invest their money in small batches.

#1. Easy and automated

You don’t have to depend on a third party. It is easy as opening a bank account and set it up and deposit your money.

Once deposited, the process of buying shares is automated at intervals.

#2. Low fees at a discount

This method of buying shares attracts the lowest fee unlike through a stock-broker.

Very often, some companies offer discounts for their direct stock purchases. The discount offered to the brokerage firms are offered to you directly.

#3. Direct and through a transfer agent no broker

It is direct so you don’t have to worry if you are getting screwed by a third party. What you pay for is what you get and that is it.

Some companies allow you to do it directly through them or via a transfer agent who charges a very small fee. There is no man in the middle scenarios.

However, there is a catch with this method.

The law prohibits companies to advertise their direct stock purchase plans. You will have to ask the company or read through their website to see if they offer direct stock purchase plans.

In summary:

Direct stock purchase plan allow you to buy stock direct from the company you desire to be a shareholder.

It requires very little money to get started. A simple $50 dollars is enough

The whole process is very simple and straight forward. It takes only 3 steps and you are set.

You will attract zero fees under the direct stock purchase plan. However, you will sometimes attract a small fee which is negligible.

The whole program allows you to invest long term in a simple and automated way.

4. Use an online discount broker

Another way to start investing with a small amount of money is through online discount brokers.

Why an online discount broker?

Unlike the traditional brokers, online discount brokers help you invest in the stock of your choice at a fraction of the cost.

You can invest any amount of money however small.

The costs are kept low for you to enjoy higher returns on portfolios of your choice.

However, make sure to do your research before jumping in.

Often, online brokers only help you with the process of investing. They are not specialists in the field of finance and therefore are not mandated to offer financial advice unless stated.

But with them, you can create an automatic investment plan for as little as $100 dollars and start investing for your future right away.

Different online brokers have different minimums to get started. Some require $0 while others require you have over $100 to open an account with them and start investing.

Whichever amount your budget allows you to start with, there is an online brokerage service best suited for you.

Start investing your small cash today.

5. Start Investing in Exchange Traded Funds, ETFs

Have you been dreaming to invest in mutual funds but do not have enough money to get started?

Then, Exchange Traded Funds (ETFs) are the best alternative for you.

ETFs, offer the benefits of a mutual fund at a fraction of the cost.

This makes them very lucrative for people wanting to start investing on a budget.

ETFs are traded in the same way as stock. But, unlike stock, they contain a large pool of diverse stocks, bonds and assets spreading your risk and guarantee high returns.

As a result, you get lower commissions buying ETFs compared to when buying individual stocks.

In case your end goal is to invest in mutual funds, you can start with ETFs today.

As your investments grow over time, you can then move to mutual funds to enjoy the security and continence it offers.

Remember, ETFs are bought and traded in the market like normal stock.

You can buy a couple of ETFs at any online brokerage firms today at lower costs to get started.

Wondering where to start from?

Download Acorns app now, configure it an start saving passively.

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