Investing Small Amounts

By now you hopefully realize that the sooner in your life you start investing, the more money you will have available to you when it comes time for retirement.  But what if you are in a position where you cannot put aside much money?  What if you are living paycheck to paycheck? 

Fortunately, there are a few options available to you.  Your first, and probably best choice, is to see what investing opportunities your place of employment offers.  A 401(k) account or some other variation of a stock option is a good way to start your investment portfolio.  Many companies allow you to invest a percentage of your paycheck in company stock, sometimes as little as 1%.  If you decide to do this, and I strongly suggest you do, you will probably not even notice the amount missing from your checks.  Yes, the amount will be less, but it is money that you will not have ever had in your pocket.  This makes it much less painful than paying other bills.  Most people spend money as fast as they make it, and if it is not automatically set aside, it is just spent on things that are not important.  The sacrifice of 1% of your paycheck will not be missed. 

Another option is what is known as “automatic investing.”  Many online brokers offer this option, where money is invested on a weekly or monthly basis into stocks of your choice.  This involves slightly more effort to set up on the investor’s account, but once begun, only needs infrequent monitoring.  To use this, first you must deposit money in a margin account.  After you select which stock or stocks you wish to purchase, you decide how often you wish to invest money.  The amount can be as little as $20 a time.  A nominal fee is charged per transaction ranging from $4 to $10, depending on which broker you choose to go with.  Usually, when you wish to cash out the account, fees are higher.  If you invest for several years, however, the amounts withdrawn will be larger than the amounts deposited, making the higher fee much more manageable. 

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