How to Start Investing with Little Money

Investing is one of the best ways to grow your money for the long term, but it can be daunting to start the process. While 55 percent of non-investors think they don’t earn enough money to invest, the truth is that you don’t have to be a millionaire to begin your investment journey. A couple extra thousand here and there can really make a difference, especially if you start investing as soon as possible. Here are some easy ways to make your money work even harder for you.

1. Determine an Amount to Start With

Before you start investing, it’s a good idea to determine how much money you can put in as an initial investment, as well as gain an understanding of what you might be able to contribute on a regular basis. To figure this out, check your monthly budget to see if there are areas you can scale back on, or consider putting the difference from a pay raise directly towards investing. Make sure that you also have a plan to pay off any large debts—like student loans or credit card debt—and create an appropriate emergency savings account as part of your overall financial strategy, as well.

2. Invest In Your Employer-Sponsored 401(k)

If your employer offers a monetary match on retirement accounts, then it’s a good idea to start putting your investment dollars into your employer-sponsored 401(k), since not doing so is like leaving free money behind. You can check in with your Human Resources department to learn about the specifics of this type of investing, but it’s usually very simple to set up, and your contributions can be taken directly from your paycheck and applied to your retirement account so that you don’t have to physically do anything yourself.

3. Open a Supplemental IRA

If you’ve already met your employer’s 401(k) match or you don’t have that option, opening up an additional retirement fund—like a traditional or Roth IRA—can be a good way to save even more for your retirement goals. Check-in with your bank to see what wealth management investment and retirement options they might offer, or do some research to see if a web-based account would work for you. If you do want to consider this additional option, it’s a good idea to check in with your accountant or a financial expert to ensure you put the appropriate amount in (there are limits) that also maximizes your rate of return.

4. Consider Automatic Investing

With just a $5,000 investment, you can open an automated investing account that offers low Advisory fees and access to a digital advisor that uses real-time data to automatically rebalance your portfolio to make the most of your investments and show you the full potential of your financial picture. This is a low-key, easy way for people to invest when they aren’t sure where to start or don’t have the time to work closely with a financial advisor right now. The perks of using this type of account are similar to working one-on-one with an advisor but without the need to hop on a call or spend too much time thinking about it.

5. Set Up Regular Check-Ins

Starting the investment journey is an important first step, but so is regular upkeep. Besides setting up re-occurring investments, it’s important to check in on your portfolio periodically to ensure you’re investing in the right options for your specific financial goals and timeline. If you’re working with an advisor, consider having a check-in call every couple of months to see if any changes need to be made to optimize your growth. You might also consider putting any additional money you receive over the year—like a bonus or inheritance—towards your investments since this is the best way to make the most out of any lump sum of cash.

Investing doesn’t have to be scary, and it doesn’t have to cost a small fortune. When it comes to growing your money, even small investments can make a big difference down the road, as long as you are committed and you stay the course. For additional help, consult with a financial expert who can help point you in the direction of the types of accounts that would work best for your needs, as well as how much to invest based on your income and other financial needs.