Investing is one of the best ways to grow your money, and yet only about 54% of Americans invest in the stock market.
Gallup reports that the percentage of investors in the U.S. fell to a ten-year low in 2011 – just a few years after the 2008 stock market crash and smack in the middle of the great recession. Understandably, it’s easy for a novice investor to get nervous about dipping his toe into the “investing” water.
But the biggest reason most people avoid investing? Most people feel that they don’t have enough money. I’ll admit that I’ve put off investing for a long time because I felt like I wasn’t making enough money. Many a first-time investor has a similar script running through his head: “It’s not for people me.” “I can’t afford the risk.” “I’m not rich enough.”
But that’s the beauty of investing: the market is open to any type of investor, large or small. And overtime, a little bit of money invested consistently can go a long way.
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So how do you begin if you’re a first-timer without a lot of cash? Here are three easy ways to get started:
1. Look for a broker that lets you to start with a minimal initial deposit.
One of the biggest misconceptions is that you need thousands of dollars saved up first before you start investing. There are plenty of opportunities to start building a portfolio without a lot of money upfront. For example, many online brokers let you open up investment accounts with little or no money down, and online investing sites also make it easy to schedule automatic investments and to track your portfolio.
2. Invest in low-cost funds.
If you’re concerned that you don’t have the budget to contribute a lot of money on a monthly basis, you’ll want to make sure you’re getting the biggest band for your buck. Avoid high trading fees that could eat away at your earnings, like with exchange traded funds, or ETFs. Several big online brokers offer free ETF trading, meaning you don’t pay a fee when you by or sell.
3. Take advantage of your employer’s retirement opportunities.
Your employer’s retirement is often the easiest place to start – and if you’re lucky, even double your contributions to your portfolio. It’s very simple to make contributions directly from your paycheck to your employer-sponsored retirement account. Even if you can only contribute 1% of your take-home pay, you’ll still be making progress (and you’ll hardly even notice when that money is shaved off your paycheck). Finally, take advantage any match your employer provides for any contributions you make to your retirement account. That’s essentially free money!
Wherever you start and whatever amount of money you have, don’t let it hold you back from investing. A small amount invested consistently over the long run is better than not starting at all.