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Smart Ways to Get Started Investing (With Little Capital)

May 9, 2016

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Interesting in investing but don't know where to start? Here are several smart ways to get started investing!Investing is something I haven’t covered much on my blog in the past. That’s partly because I haven’t done much investing myself, and also because of a lack of knowledge on my part.

Luckily for those of you interested in learning more about investing, I’ve been doing quite a bit more research and writing about investing lately as I’ve taken an interest in the subject, and I’ve needed to brush up on my investing knowledge for some client projects as well. 🙂

Because of my lack of knowledge about investing, I always had a bit of a fear about writing about investing. I never thought investing would be a topic I would cover because as I said, I haven’t done a lot of investing, plus I always thought writing about investing would be boring.

My idea of investment writing was giving advice about which specific funds to invest in, which companies to invest with, etc. But as it turns out, there’s a lot more ways to write about these same types of topics but in a fun way.

For instance, you can check out a recent post by my friend Andrew from Listen Money Matters about investing with Betterment. It’s a monster post, but it’s well-written and still entertaining enough to keep you from drooling on your chin while reading it. #AndrewfortheWin!

If you’ve faced some of these same fears about investing as I have, or if you’re lack of capital has held you back from investing in the past, here’s are some smart ways you can get started investing anyway. Because investing is the only real way that most of us will build wealth for the future.

Start Small

One smart way to get started investing is by setting aside small amounts of money as you are able to. You can save these anywhere you’d like, a piggy bank, a dedicated savings account at your local bank, or in an online bank with a better interest rate, like CapitalOne360. Then once you hit the minimum required to start an investing account with your company of choice, you can transfer it there to start your first investment.

Another option is to use Acorns, which is an app that rounds up your debit and credit card purchases into investments. It’s a great idea to help you get started investing with little money. The best news is that you probably won’t even miss the small amounts taken from your account, so you’ll forget you even had that money.

An Employer-Sponsored Retirement Plan

If you are still “working for the man” one way you can count yourself lucky is the fact that most companies offer a 401(k) or other retirement plan for their employees. It may see difficult to set aside even a small percentage or dollar amount of your paycheck to go into your retirement plan, but this is really the best option if you want to get started investing. Many employers offer a matching program where they will put additional money into your retirement investment account if you contribute to their plan.

At my former employer, the match was a dollar-for-dollar match on the first 5% you contributed to your retirement account. If you only contributed 5% of your pay, you were automatically doubling your money by getting your employer’s match. Not to mention the increases you will get by having both amounts of money invested (assuming the market goes up over time). This is why I suggest it’s even a good idea to consider investing in your 401(k) while you still have debt. Getting that employer match is really the best thing you can do for your future self.

To make your 401(k) even easier, you can elect to invest in life cycle funds instead of individual funds. Life cycle funds are based on your projected retirement date (year). The further you are from retirement, the more aggressive the fund with be when it comes to risk. As you approach retirement, the fund will automatically become less aggressive you are at less risk to lose everything right before you need to start making withdrawals.

DRIPS

Another option to consider to help you get started investing with little capital is a DRIP, or dividend reinvestment plan. A DRIP is a plan that allows you to purchase dividend-paying stock directly from participating companies in small amounts. You have to re-invest the dividends rather than taking the cash earnings from your investment, but it’s a good way to get your foot in the door with investing. Some companies that participate in this program are GE, Coca-Cola, Home Depot, and more. Most investments have to be $10 or greater.

Betterment

Another option to help you get started investing is Betterment. Betterment allows you to open an account with no minimum deposit and you can contribute as little as $10 at a time. It’s an automated investment platform that makes it easy for you so you can be essentially hands-off on your investments. Your portfolio on Betterment will include several ETFs based on a questionnaire you fill out about your comfort level with risk.

There are a lot of options to help you get started investing. Several new ones have popped over the past few years to help those with little capital so they can get started building wealth for the future as quickly and easily as possible.

What’s holding you back from taking the plunge to get started investing?

Interesting in investing but don't know where to start? Here are several smart ways to get started investing!
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Kayla

Kayla is a mid-20s single girl living in the Midwest, USA. She is focused on paying off her consumer and student loans, while simplifying her life and closet. You can join her on her journey at ShoeaholicNoMore or follow her on Twitter.

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7 responses to “Smart Ways to Get Started Investing (With Little Capital)

  1. I like to feel I have a thorough understanding of investing before I start, but of course once you start researching, it could go on forever! I’ve reached a point where I probably feel comfortable to start, but the second thing holding me back now is that I am still building my emergency fund – *sigh*. At least that buys me more time for learning!

    1. I’m not doing a lot of investing right now either since I’m still paying off debt and saving, but I feel like I’ve learned a lot so I’ll be more prepared when I do start doing more investing.

  2. I’ve never heard of DRIPS, but I’m definitely going to look into it because dividends have always piqued my curiosity. I haven’t explored the topic of investing much in my writing either, but I’m certainly open to it. Just need to find some good reads and study up. Thanks for sharing this, you’ve given me my starting point to study!

    1. Glad to hear it! I still have more to learn about investing too, but I feel like I’ve learned a lot in the past few months due to some client assignments. 🙂

  3. It’s really important to invest in a 401-K up to your employer’s match and to consistently make your investment, no matter what the stock market is doing. When you are young, just invest in an S&P 500 index fund or Total Stock Market Index fund with 100% of your 401-K. Remember that when the stock market is has taken a “dip” like in 2008, that stocks are “on sale” and you will really benefit from buying stock during these times. Too many people I know bailed out of the market when it was down, which is exactly the opposite of what you should do. Also remember that what you invest in your 401-K isn’t taxed until you take it out at retirement, so the government is helping you to invest because the money is initially untaxed.

  4. I opened an Acorn account about a month or so ago. As of today I have $82.87. So far I like it. I am just trying to figure out how much and how often I plan to contribute to it. I would say this is by far the easiest and cheapest route to go for a beginner investor.

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