Investing 101: How to Start Investing

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A common misconception amongst masses is that to make an investment you need thousands of dollars. In reality, there are ways you can invest with little capital and reap huge rewards. Investing little initially will reduce your potential losses and help you learn this trait. Investing smart needs experience however we have listed down a few ways you can start your investment.

Start Saving Up!

For investment, you require some spare capital at your hand. It’s recommended that you start saving money before actually investing in something. It will take less time than you actually think and will require some basic steps. You can follow the cookie jar approach and save a sum of money each week and put it away. At the end of year, you’ll have sufficient funds to invest in something worthwhile.

Try to make yourself a bit lean on expenditures so you can quickly save the required capital. Online savings account is a great modern version of the cookie jar approach. If you feel you don’t have the consistency or willpower to save each week, there are multiple apps designed to aid you. They’ll save a little some of money from your account separately on their own.

Enrolling into your Employer’s Retirement Plan

Individuals with tight budget find it difficult to invest in the retirement plan and would simply avoid the thought altogether. However, I encourage you to start small but make some contribution to the retirement plan as it will have great consequences for your family. You can increase your contribution yearly percentage you are comfortable with. Your annual increase in pay can compensate for the contribution for your retirement plan.

Investing in Mutual Funds

Mutual funds are perfect for new investors as they allow you to invest in stocks and bonds effectively. Mutual fund companies however require a minimum investment amount ranging from $500 to $5000. So if you are a relatively new investor, you’ll have to raise the sum of investment to this amount at least. You can also opt for monthly installments if you aren’t comfortable with a single transaction. Automatic investing is a common feature in these mutual fund companies and should be sought after. You can configure your automatic investing arrangement as per your payroll schedule and reap the benefits of it in the long run.

Investment in Treasury Securities

Investing in treasury securities isn’t the first priority of many newcomers. However, it’s the perfect place to park your money and earn some interest through it. It’s known to be the waiting spot that buckles you up for high risk/high reward investments. Through treasury direct you can easily purchase these saving bonds. Anyone can buy fixed-income US government securities. The maturities of these bonds range from 30 days to 30 years according to your own preference. Another type of securities are TIPS which make principal adjustments based on the inflation changes in consumer price index on top of the interest.

Another great approach is to fund your mutual funds through Treasury Direct account. The account can be funded through your payroll savings so it isn’t a burden financially upon you.

Key Notes to Make a Rewarding Investment

Lastly, it’s important to do your own due diligence before adopting a particular investment plan. Don’t be hesitant to ask questions from various firms to understand the pros and cons associated with each type of investment. However, don’t take advices from unqualified people as it will confuse you furthermore and will result in havoc at your end. Don’t follow the FOMO and don’t get scared due to the FUDs in a particular market. Be rational in your thinking and follow your gut feeling.


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Investing 101: How to Start Investing

by Bjorn time to read: 2 min