How to Invest $20, $50, $100, $500, $1000
Most people believe starting with as little as $
How to invest $20, $50, $100
The best way for someone with little money to invest is to be employed and make use of your companies retirement plan. That may sound expensive like jeez I can’t open an account well… Ask your company about their retirement plan even if you don’t have very much money. Why? Because you can have a small amount like $10 per paycheck taken out instead of a huge chunk. See now even though you only had $500 or $1000 when you started we’ve found you a way to invest and save more for your retirement and that’s key.
You can also easily diversify in whatever funds your company has. The key is to find the ones with the least amount of fees. We reccommend you find the closest thing you can to Vanguard’s Total Stock Market Index Fund. Something mimick’ing the S&P 500 or such would great too and just put you money into that and watch it compound. You can even use Dividend Reinvestment Plans (DRPs) to reinvest any dividends paid and let them compound further and further. DRPs do not charge any commissions
Unfortunately we all don’t have company retirement plans and one of the cheapest way to invest is through the Direct Stock Purchase Plans. This can also be teamed with a Dividend Reinvestment plan and allows you to bypass brokers and their commissions.
Admittedly it is more difficult to valuate a company and insure you are not overpaying and to properly diversify but there are many major corporations like Coca-Cola and Pepsi and Johnson and Johnson and Johnson that are sound and not horrifically expensive. The danger lies in the fact that if you don’t know how to valuate securities then it will be difficult to know when not to purchase.
How to invest $250,$500
If you have $250 or more then you may be able to open an Individual Retirement Account.
So you don’t have a 401k, and you still only have $1,000 to start to invest with but you can still have the benefits of a retirement account we listed above. You can open with your traditional discount broker a Roth IRA or IRA. A traditional IRA is like the retirement account and will come out pre-tax while a RothIRA will be taxed but not taxed when you withdraw. Traditional Retirements or IRAs are taxed when you are older and withdraw and in theory have a lower tax rate.
With this you can put your money in a Vanguard Total Stock Market Index fund or something similar to what we listed above.
How to invest $1,000-plus
At this point you can do Vanguard, or a discount brokerage. You can buy the Total Stock Market Index Fund or S&P 500 or similar ETF from it and you can begin to compound money.
The power of the stock market and learning how to invest correctly comes from the magical power of compounding If you’re 30 and only invest a mere $1,000 and return the 7% or so the market has earned since 1946 then after 35 years your $1,000 will be $10,677
Now think about if you added $1,000 a year and begun when you are 30 then you’ll have $148,913.
We reccommend exploring the site further as we have article for those interested in learning how to invest in index funds and learning how to select individual securities and become an “enterprising investor”.