If you think you need lots of money to invest, think again.
Nearly 70% have bought stocks for $5 or less.
How Can You Invest With Just $5?
New to the game:66% of investment app users got started since 2020.Did you know?You Can Get Paid Up to $140/Month Just for Sharing Your Honest Opinion
Investors who want to invest a small amount of money have more options than ever.
Many penny stocks trade for $1 or less.
Penny stocks look appealing because they trade at rock-bottom prices, but theyre incredibly risky.
The companies behind them are often unproven or financially troubled.
Fractional shares let you invest small amounts in virtually any stock you want.
As the name implies, you get a corresponding fraction of a share.
No Interest Til Almost 2027?
Balance Transfer = Credit Card Cheat Code
For example, lets say you want to invest in Amazon.
As of this writing, Amazon shares were trading for just above $3,000.
Youd get 1/600th of a share.
Many apps let you get started with as little as $5.
Youll automatically invest small amounts on a regular basis, often in ETFs and mutual funds chosen by arobo-advisor.
Some micro-investing apps let you round up your purchases to the nearest dollar and automatically invest the change.
Did you know?
But if youre already saving in a retirement account, investing extra using an app is a good choice.
(Note: Some investment apps allow you to open IRAs and retirement accounts for self-employed people.)
Lets assume you did so consistently over a 30-year period, earning annual returns of 8%.
Youd have more than $32,000 extra in your nest egg after four decades.
Not too shabby when you consider that you would have invested less than $8,000.
But make a goal of investing more money any time your income increases.
For example, you could budget 25% or 30% of every raise toward reaching your investment goals.
They may look small, but they can make a serious dent in your returns.
Lets say you invest $50 in a lump sum and leave your money put for a year.
If your investment app charges $1 a month, that amounts to a 24% investment fee.
Aim to keep your investment costs at 1% or less of your total investment.
If you automatically invest $5 a week using an app, youre practicing dollar-cost averaging.
Doing so helps you avoid making emotional decisions, like selling in a panic when your investments are down.
If the stock market is up, obviously youll pay more for your investments.
But investing on a consistent schedule ensures that you invest when the market is down, as well.
People who practice dollar-cost averaging tend to lower their investment costs over time.
But before you get going investing, aim for a three-monthemergency fund.
Having money saved for an unexpected expense or loss of income will protect your future investments.
Once youve saved for a rainy day, dont delay investing.
Time is your friend.
Investment apps make it easier than ever to get started, even if you dont have deep pockets.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder.
Send your tricky money questions to[email protected]or chat with her inThe Penny Hoarder Community.
Responses were weighted for age and gender so that each response is representative of the U.S. population.
The overall surveys margin of error is +-2 percentage points at a 95% confidence interval.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
