For many people, investing seems complicated and daunting. However, investing is actually not as scary or risky as you might think. Another misconception is that you need a lot of money to be an investor. But this is also incorrect. In fact, you can start investing with as low as one dollar!
When you think of investing, a few things come to mind. The highs and lows of the stock market or the high-stress intensity of stockbrokers are two examples. However, investing can be pretty casual and low-stakes, depending on how you approach it.
Do you want to learn about investing but aren’t sure where to start? Then, keep reading for some excellent tips and super-helpful apps!
Consider Which Approach You Want When Investing
Investing isn’t just one thing or one idea. Investing can be whatever you want it to be! However, there are three main approaches to investing that you should be aware of:
- The on-your-own approach: This is where you learn to invest on your own and choose all of your own stocks, bonds, and funds.
- The assisted approach: With this method, you use a professional broker to help you invest your money.
- Retirement investing: Many people do this through an employer, but you can also invest for retirement on your own.
In the following section, we’ll be going over these three methods so you can decide which one is right for you.
Choosing Your Own Stocks/Bonds
Choosing your own stocks, bonds, and funds to invest in is definitely the riskiest of the three main methods. Yet, it can also have the highest rewards. Unfortunately, this option is probably the least smart for beginners, as it requires quite a bit of knowledge of the stock market and how stocks work (or a bit of luck!).
Choosing your own stocks and bonds usually entails going through a professional to buy them. You can do this via a website or investing app. You’ll basically choose which stocks or funds you want to invest in and how much you want. From there, you can continue to buy, hold, or sell, depending on your investment goals.
Investing With a Professional
Investing with a professional is one of the smarter options for novice investors. Using either a robo-advisor or a brokerage firm, you can discuss your financial goals with an investment professional. They choose stocks, bonds, and funds to invest in and do all the hard work for you.
With this method, you will only really need to know your primary goals as an investor. However, you must remember that brokerage firms will take a fee, so be prepared to pay for a professional.
Investing Money for Retirement
Investing money through your employer with a 401(k) is one of the best ways to save for retirement. A 401(k) is an employer-sponsored fund for your retirement. Often, there will be an incentive for investment. For example, many 401(k) programs will be matched by your employer.
Contributions to your 401(k) come out of your paycheck before taxes are deducted, so you automatically pay less to the IRS. These regular contributions can reduce your tax liability at the end of the fiscal year.
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Learning The Differences Between Stocks and Mutual Funds
The primary difference between stocks and mutual funds is that a share or partial share of a stock represents a percentage of one company. But mutual funds represent small percentages of many different companies, bonds, or other assets combined.
This is often what people mean by a “diversified portfolio.” Your money is diversified in mutual funds, and the investment benefits are often more consistent and reliable. On the other hand, stocks can sometimes be more financially rewarding. But this is also “putting all of your eggs in one basket,” so to speak. So stocks are also more volatile and unreliable. Only you will know what to choose. Everyone is comfortable with a different level of risk, especially when it comes to money.
What Are Bonds?
Bonds are different than stocks in that they are a more stable investment. With bonds, you (the investor) are loaning money out to a company or the government for a specific period of time. When the time is up, you get your money back plus interest. Its a little bit like a bank loaning cash, except you act as the bank.
You’ll need at least $25 to purchase one bond. Then, you’ll need to wait for the bond to mature to see your earnings. As of January 2022, the current rate of interest on bonds is 3.56%. And the average interest rate is 0.06 for savings accounts. If you want to save and earn interest over the long term, bonds might be a good conservative choice.
Investing Doesn’t Require a Lot of Money
To become a successful investor, you might think that you need to invest thousands of dollars in stocks. This is not true at all! Investing is not exclusively a “rich people” thing, and you don’t need tons of extra money to get involved. In fact, on many new investment mobile apps, you can start investing with as little as $1.
If you want to get involved in the market, you could consistently put money aside every week. Even if it’s only a little bit, your investment portfolio can build up quickly. And you might reach your goals sooner than you imagined.
Funding Your First Investments With Side Hustles
Investing may seem impossible if you live from paycheck to paycheck or on a tight budget. The reality is that it’s hard to find the money for necessities, let alone to play the stock market. But investing can also be the key to long-term savings and living a prosperous lifestyle.
Fortunately, there is a way to find some money to start investing with micro-jobs or side gigs. From delivering food to dog-walking, there’s always a way to pick up some extra cash. And those extra few dollars can turn you into an active investor.
One idea is to share your opinion for cash with sites like Branded Surveys. Paid online surveys allows users to earn anywhere from $.50 to $2 per survey, and you can take paid surveys at any time of day or night. Since you only need a buck or two to start investing, taking online surveys for money is ideal. You don’t need to alter your schedule in any way. And you can earn right from your smartphone.
Having an easy side hustle that can help you earn a little bit of money each day is perfect for learning how to invest.
See also: Best Sides Jobs for Busy People
Best Investing Apps
With the rise of smartphones, investment apps have become incredibly popular. Investment apps are ideal for those interested in more short-term or low-budget investments. And they are also perfect for people who are new to investing and want to learn the ropes.
They are low-risk, too. For example, you can start with only a dollar or two with many investment apps. So if you happen to invest in the wrong stocks and lose money, it’s not going to be a major setback or financial disaster.
Public is a mobile app that allows users to safely invest in stocks and cryptocurrency right from their phones. Public is insured by SIPC for up to $500,000 and uses advanced encryption methods, so your money is always safe. With Public, users can invest in partial shares of stocks, so you can start investing with only a few dollars. Public makes it incredibly easy to get into the world of investing. And you can even invest in popular cryptocurrencies like Bitcoin and Ethereum.
Robinhood is one of the most well-known and popular investment websites. And now, the company has a handy mobile app. Robinhood offers commission-free stock trading, allowing investors to start with stocks, funds, and cryptocurrencies using very little money. Moreover, Robinhood is safe for beginners as your funds are protected for up to $500,000 through the SIPC. Additionally, they are regulated by the Securities and Exchange Commission (SEC).
Acorns is an excellent investing app for those who don’t have a burning desire to choose their own stocks and mutual funds. With this App, you can either deposit a little chunk of money right away or contribute direct deposits over time. Then, Acorns will choose which stocks, bonds, and mutual funds to invest your money in. Acorns is suitable for those who want to have more consistent and reliable investments while avoiding the tumultuous nature of the stock market. First, you’ll choose a specific level of risk you’re most comfortable with. Then, Acorns will invest your funds in reliable, stable funds and stocks.
Should I Start Investing Even if I Don’t Make Much Money?
The short answer is absolutely yes! Of course, the younger you are when you start investing, the better off you will be later on. But it’s never too late to build a little nest egg, even if you’re on a budget.
Many people avoid investing because they think its only for people of means. Or they don’t understand how it all works. But this reluctance is unnecessary. Investing is for everyone, regardless of your income! If you choose to start investing (even with just a few dollars at a time), you can give yourself some substantial earning potential over time. It’s a great way to start building wealth for your future.