Whether you’re just starting out on your own, recently flourished in your chosen career, about to retire, or currently, on your golden years, it’s never too late to invest and think about your financial future. You can still manage your capital appropriately for it to benefit you in the long run. All the experts and successful investors in the world started out at exactly where you are right now, so there’s no reason why you won’t succeed too.
So how exactly should you begin?
Some people ignore investing because of the assumption that in order to start you need to have thousands of dollars. Investing terms such as market capitalization and return on equity can be very overwhelming as well. This kind of mentality is wrong. You can start investing for as little as $50 per month.
The secret to building wealth is actually through practicing good habits such as saving up a certain amount of money every month. Once you practice investing as a habit, you’ll find yourself financially stable later on. For beginners like you, consider these top 3 best investment ideas we prepared for you.
Enroll In Your Employer’s Retirement Plan
Consider enrolling in 401 (k) or other employer retirement plan. This may sound a little ambitious especially if you’re on a tight budget, but it is possible to start investing in an employer-sponsored retirement plan with just small amounts.
Begin by investing just 1 percent of your salary into the employer plan. A small percentage such as this will make it impossible for you to miss. Not only that, the tax deduction you will get for doing this will make the contribution even smaller. You have to commit the 1 percent contribution and gradually increase it every year. Maybe you can increase your contribution to 2 percent after 2 years of paying and so on. It would be even better if you increase base on your annual pay raise to make the contribution even lesser and getting a 2 percent increase in pay would mean the increase will be divided into two, for your retirement and for your checking account. It also goes to your advantage if your employer decides to match your contribution.
Invest in Fixed-Income Securities (Bonds)
Buying a fixed income security means lending money to the bond issues and in return, you’ll receive an interest income. There are countless ways to do it. You can buy certificates of deposit and money markets and investing in corporate bonds or tax-free municipal bonds, and U.S savings bonds.
Stocks, on the other hand, has a lot of fixed-income securities bought through a brokerage account. You have the option to choose between a discount or full-service model when selecting your broker. You don’t have to have a lot of money in order to open a new brokerage account. The minimum investment varies but it usually ranges from $500 to $1000 and sometimes even lower for IRAs, or education accounts. You may also talk to a registered investment advisor or asset management company that works on a fiduciary basis.
Consider Low-Initial Investment Mutual Funds
You can invest in a portfolio of stocks and bonds at once through investment securities or mutual funds. They are perfect for new investors because of this reason. The only problem you might encounter is that a lot of mutual fund companies demands initial minimum investments of between $500 and $5, 000. Although for some this is already low, for people with very little money and are the first-time investor, the minimum can still be difficult to reach. Good thing there are mutual fund companies who are willing to waive the account minimums between $50 and $100 provided you agree that they get automatic monthly investments from you.
A common feature with mutual fund and ETF IRA accounts, automatic investing is usually available in mutual funds from Dreyfus, Transamerica, and T. Rowe Price. It’s not common with taxable accounts but it still worthy to inquire about it. An automatic investing arrangement is better when you do it through payroll savings. What you can do is set up an automatic deposit situation through your payroll just like what you do with an employer-sponsored retirement plan. You can ask your human resource department for assistance on setting it up.
