One of the best ways to build wealth over the long term is to invest. Investing allows you to take your capital and put it to work for you. In the past, the perception was that you needed a large sum in order to start investing. However, thanks to technology, and online brokers, almost anyone can start investing without too much trouble.
Do You Have $25? You Can Start Investing
Most online brokerages will allow you to start investing with as little as $25. Some, like TradeKing, don’t require you to make an opening deposit at all. You can open a brokerage account, and then fund it when you can.
In many cases, you can even buy partial shares. If you are investing in an index fund or an individual stock, you can purchase a portion of the share. If you have $30 that you want to invest, you can purchase as many shares as possible. If a share costs $20, you can get 1.5 shares. You don’t have to buy complete shares all the time.
Opening a brokerage account is fairly easy. You can do it online, as long as you can provide the following information:
- Birth date
- Social Security Number
You can also link your brokerage account to a bank account so it’s easier to fund your investments. You will need your bank’s routing number and your account number to link the two. Some brokerages also require your signature, but you can usually print out the appropriate form, sign it, and then scan it into a PDF and email it to the brokerage.
To ensure that you continue investing, you can set up an automatic withdrawal from your bank account, and set up a recurring investment order. This will help you to build up your portfolio over time. Investing a little bit consistently over time can have a significant effect on your future wealth.
What Should You Start With?
Because there is a risk of loss anytime you invest, it is important to start with investments that you understand. Learn how stocks work before you invest. Prior to purchasing a bond, know how they function. And make sure you know what an index fund is before you put your money in. The simpler investments can be understood after a few minutes’ study.
Many experts recommend that you start with the simpler investments. Index funds are popular because they are easy to understand, low cost, and come with built-in diversity. Treasury bonds are also popular for novice investors. For those who want to try investing in individual stocks, dividend aristocrats are often considered less risky choices.
Whatever you start with, though, it should be something that fits with your long-term financial goals, and that will help you reach your money objectives. Be careful as you start, though, since you don’t want to invest money that you can’t afford to lose. Always be aware that you could lose money, and that there is no full-proof way to invest and earn money. However, that said, if you are willing to take a little risk, you have a better chance of returns.