5 Easy Ways to Start Investing With Little Money

For many people, investing is an intimidating word. In fact, 53% of non-investors say they don’t have the money to invest and 21% say they don’t trust stockbrokers or financial advisors.

This lack of cash or trust causes millions of people to avoid investing year after year. And with this decision comes the outcome of losing out on potential income.

The truth is that investing doesn’t have to be complicated. And you don’t have to have a lot of money to start investing.

In this article, we’ll walk through 5 of the simplest ways to start investing with little money. Keep reading to learn more.

  1. Evaluate Your Budget

When people think of investing, they immediately think of thousands of dollars, the stock market, and New York City firms.

But one of the simplest ways to start investing? Look at your budget. With a little work, most people can find extra money to invest right in their paycheck.

This is one of the easiest ways to find money to invest.

Start by evaluating your monthly budget. Make a list of everything you spend money on. And ask yourself this question: Are there one or two expenses you can eliminate or decrease?

For example, when you do this maybe you’ll find that you’re subscribed to 4 monthly subscription services. Do you really need all 4? Could you cut one out and be ok?

Or maybe you’re spending a lot more on eating out than you realized. Cutting one or two meals a week could make a massive impact on your spending. And you can instead use that cash for investing.

Eventually, you can add in other investment strategies to this plan. This could include a decision to invest in penny stocks.

  1. Maximize Your Payroll Deductions

Here’s another popular tip on how to get into investing: reconsider how your paychecks are distributed each month. Most people have their entire paycheck deposited into their checking out.

But did you know you can have portions of your check deposited into any account you want?

This is a great way to passively save or invest your money. For example, you could have $50 of each paycheck get sent directly to your Roth IRA account each time you get paid.

You won’t have to think about the action. After a month, you’ll hardly even notice it’s happening.

And it can have a big impact! Even if you invest $50 per paycheck, that will amount to over $1200 after one year.

  1. Invest Your Spare Change

Now let’s talk about another one of the most popular investing tips: investment apps. There are lots of them out there and they can help make your investment goals a reality.

One of the most well-known and renowned investment apps? Acorns.

It works by rounding up your debit or credit card purchases to the nearest dollar. In this way, it’s a digital way of investing your spare change.

And you literally don’t need any money to start. You will build little by little as you go.

Once your balance reaches $5 you can use the Acorns algorithm to invest in ETFs. And the good news is that ETFs diversify your investment, which is a safe way to start.

  1. Choose the Right Retirement Plan

Let’s talk about another pillar of a sound investment strategy: regularly saving for retirement.

This another great solution for investing with little money. Start by investigating your employer-sponsored retirement plan. If you are employed, this is the best place to start.

A similar strategy applies here to point number 2: The funds you decide to invest will be automatically withdrawn from your paycheck so you don’t have to even think about it.

Another tip? Check to see if your company offers a 401k match. Many businesses will match your contribution, essentially resulting in free money in your retirement account from your company.

If an employer-sponsored plan isn’t an option for you, don’t fret. You can open an IRA, either a traditional or Roth.

There are lots of reputable institutions that offer these like Vanguard or Fidelity. You can often even open an account online.

  1. High Yield Savings Accounts

Last but not least, our final tip is to open a high yield savings account. Did you know that there are savings accounts that will dramatically increase your return on investment, just by having your money sitting in their account?

It’s true. Do some quick research to find a list of the best high yield savings accounts. Currently, the best ones earn 0.8% to 1.4% interest.

This is leaps and bounds better than the interest rate you’d get at your local bank.

However, because many people are intimidated by the world of investing, they stick to what they know, using the same bank they’ve had since high school. And they miss out on hundreds of dollars they could have for free by utilizing a high yield savings account.

This may be the easiest of all of our tips. Open your high yield savings account online today and transfer your money there tomorrow. In a year, you’ll have earned free cash that you can put right into your investment account.

Investing With Little Money

There you have it: our top tips for investing with little money. In all reality, it does not have to be a complicated process.

By taking a few simple steps, you’ll be able to set yourself up for financial success in the future. You’ll have the strong foundation you need.

Now that you’ve read through these tips, it’s time to make a plan. Which of these ideas apply most to your situation and how can you implement them?

Want to learn more about personal finance? Check out our blog for other tips today.