3 Ways to Save Money When You Invest

by Miranda Marquit · 0 comments

While many people are nervous about investing, the reality is that it doesn’t have to be complicated or expensive. In fact, if you can keep your investing plan relatively simple, it’s possible for you to invest at a fairly low cost.

Low-cost investing is important because it allows you to keep more of your money. When you invest at a low cost, most of what you make remains with you – rather than leaking away to pay fees. If you want to save money as you invest, here are 3 ways to do so:

1. Use a Discount Broker

Rather than using an in-person broker, get involved with DIY investing online. An online discount broker can offer you low commissions, including flat commissions. You pay a flat fee when you trade, meaning you pay your small fee and you don’t have to worry about someone taking a cut of your portfolio year after year.

Many discount brokerages will let you trade for between $4.95 and $6.95 per transaction. That’s not bad. There are even some with lower commissions, but many beginning traders might not get the support they need at such sites.

Look for an online discount broker that doesn’t charge annual fees or account maintenance fees. Look for a broker that doesn’t have a minimum requirement, and that has a low (or no) opening requirement. With many discount brokerages, it’s possible to open an account quickly, and begin investing relatively soon.

2. Invest in Low-Cost Funds

Rather than trading frequently (which can cost you as transaction fees add up), consider investing in low-cost funds that you don’t need to trade very often. Investing in individual stocks can get tricky, since you have to be able to identify a good deal and then hope that it doesn’t lose a lot of value.

Funds, on the other hand, follow the performances of a group of assets. That means if one asset struggles, you are instantly diversified so that your entire portfolio isn’t brought down.

There are funds that are expensive, though. Actively traded mutual funds might have a variety of fees, and expense ratios can cut into your returns. Choose index funds and ETFs that have low expense ratios. You will pay a percentage of your holdings each year, but you can usually find funds that charge 0.25 percent or less.

Choose a few funds that meet your asset allocation needs, and then invest in them over time. No need for active trading.

3. Use Automatic Reinvestment Plans

There are some investments that pay dividends. Some individual stocks, REITs, and some dividend and income funds offer regular payouts. These payouts can help you increase your portfolio without buying more shares. If you decide to invest in these types of assets, see if there is a no-cost reinvestment plan.

This plan will take what you receive in payouts, and reinvest them, without charging you extra for the transaction. This can be a great way to set your portfolio on automatic and boost your nest egg. Plus, it is a very low-cost way to improve your investing situation.

As long as you keep things simple, you should have no problem investing at a low cost.

Bonus Tip:

You can seriously cut your Internet and TV costs. Find a Verizon FiOS promotion code here and you might be able to spend less every month.

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: