How to Start Investing with Little to No Money

By Eric. C. — Published March 20, 2018

How to Start Investing with Little to No Money

Investing your money is a good start towards a better retirement. When you hear the word investment, the first thing that creeps up into mind is the big money. A good return on investment requires a big portfolio. Right? Well, it’s true for the most part, but it does not necessarily mean that you have to wait until the big bucks arrive to start investing. You can start investing at any time you want with literally too little or no money at all.

There are a number of flexible investment services that allow you to open an account without even having to spend a dollar.

If that's good news, you are in line for some more.

Here are some tips on how to invest even with very little money.

Take up a company-sponsored retirement plan

This is one of the easiest ways to invest when you have no money to spare. Company-sponsored retirement plans allocate a portion of your paycheck into a retirement plan. The amount allocated for the plan is entirely up to the employee. It can range between as little as 1% of the paycheck to 20% of the paycheck. The withdrawals on such plans are tax-free.

National debt
If you are not willing to expose your investments to market swings, then the best alternative is to invest in the US Treasury Securities. These securities are used by the government to fund the national debt. A person can buy government securities for as little as $100 through their portal. The portal can also be used to sell your securities. The securities pay interest and also accounts for inflation in the economy by making certain adjustments in the principal amount.

Consider a dividend reinvestment plan
Dividend reinvestment plans or DRIPS as it is commonly known pay dividends for small investments. You can invest in stocks or companies of your choice without having to pay an investment fee. You can simply make periodic contributions and build your investment over time. Once you have built your investments, you can even step into the bigger arena and make larger investments with what you have built up.

Mutual funds
Certain mutual funds can be opened with just about $100. You can spread your investment across different funds since the minimum is comparatively low. This way, you have a few different assets in your portfolio without having to risk too much of your hard-earned money.

Consider individual stocks
You can buy individual stocks that range between $5 and $10 through brokerage firms. You can buy quite a number of such stocks and establish a small ownership in the company that is holding the stocks. Companies like GoPro, AMC, and Virgin America sell individual stocks.

Exchange Traded Funds
ETFs are essentially similar to mutual funds in that it can be purchased using very small investments. They are traded like normal stocks. They are prone to fluctuate according to market conditions, but if you are willing to weather the storm every now and then, ETFs are a great way to begin your investment.

Lifecycle funds
Lifecycle funds are among the newest funds in the market. They are also called target funds and include investments such as real estate, cash, and stocks. Target funds are allocated to a time frame within which you wish to retire. It is named using the year by which you plan to retire. For instance, Retirement 2035 Fund. Target funds are designed to minimize the risk as you approach your retirement age. This means that riskier investments like stocks should be gradually narrowed down and risk-free investments such as bonds should be made the focus.

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