Today things are very different in the world of investing. While it’s normally viewed as intimidating and confusing, let’s clear some things up. Did you know that these days you can begin with very little money? Only have $10, $30, or $50? You qualify for investing. Does this sound enticing? Keep reading to see just some of your options.
Does your company offer a 401K but your budget doesn’t allow for large deductions from your paycheck? Don’t’ worry because you can have as little as 1% of your paycheck going toward a company 401K. So, say your weekly paycheck is $500, that’s only $5 a week. Sound better?
What in the world is a Roth IRA?
For simplicity purposes, a Roth IRA is an Individual Retirement Account, sometimes referred to as a Roth. If you are 50 years of age or older you can invest up to $6500 a year in a tax-free account, which is a big plus as you will not pay any taxes from withdrawing during retirement. If you are younger than 50 you are able to invest up to $5500 a year.
A cheaper way of investing is through individual companies. They offer Direct Purchase Plans or DPPs. You purchase stocks directly from a company instead of a brokerage firm so you’re saving on a commission fee that you’d normally have to pay using such firms.
Be aware that not all companies offer DPP’s and the ones that do cannot publicly advertise them. You can find out which do and which do not with some dedicated research.
Also note that since there are no middlemen with a DPP you have the ability to purchase fraction shares instead of whole shares. Let’s say that a company you are eyeing is offering shares for $130 and you don’t really have that amount of money. For only $65 you can purchase a half share in that company and continue to purchase more on down the line. Now you’re talking!
Where do you go to invest? Let’s take a look at a couple of options called Automated Investment Services. They collect some information from you in order to allocate your investment.
Through Betterment you can set up a free account with no deposit. They invest only in
Vanguard. Some of the benefits are:
- No minimum balance
- No minimum investment
- Low fees
You can also invest directly with Vanguard, but you’ll need at least $1000 to get started. On their website you choose the year you are aiming to retire, which determines how they choose to disperse your investment. Where is it allocated?
- Cash equivalents
With a targeted retirement fund, you won’t have to worry about your money should the market crash. Your money is safe and sound.
AIP’S (automated investment programs)
- Charles Schwab: For $100 a month, Charles Schwab let’s you open an automated investment program, AIP.
- Ariel Funds: For $50 you can start an AIP.
- Buffalo Funds: Offers a minimum $100 AIP
- Artisan Funds: For $50 you can start an AIP
Let’s say you have $100 a month to invest. In 30 years with a 10% a year earning possibility, your investment will have made $226,000.