Does the concept of investing sound exciting to you? Are you interested in starting an investment that will hopefully bring you a better fortune in the future?

By investing, you can put your savings to work, and you will earn more money. However, not many people have a huge pile of cash lying around and waiting to be invested.

Many people wonder if they can still invest with the little they have. The good news is that you do not need the pile of cash to start investing. You can start making investments in the stock market with as little as $10.

Several factors make this possible, examples being fractional shares and zero-fee brokerages. Following is all you need to know about investments and how you can make that small amount you have become the start of a massive investment journey.

 

Is there a Right Amount to Invest?

The simple and truthful answer is that there isn’t a right or wrong amount to invest. The amounts you decide to invest will usually depend on how well off you are financially and the goals you have in mind.

For instance, if you happen to have a huge sum of money in your checking account and would like to save for retirement some years ahead, the amount that you decide to invest will be vastly different from someone that has already maxed out all their credit cards and would like to start making a down-payment on a home within five years.

As such, the amount that you decide to invest will usually depend on your preferences, and there is no limit to how much you are allowed to invest. Following are some of the most useful tips and clues that will enable you to select the ideal investment amount.

 

Pay Off Debt First

You might be attracted by the potential of investment to start bringing you money immediately. However, investment is something long-term, and as such, it will start generating income slowly before you can start to earn greater amounts. This is all made possible by compound interest, growth, and dividends that come from the investments you make.

When you can pay off your debt first, you will be able to avoid the high-interest rate that is associated with them. Subsequently, paying off all your debts ensures that you can start saving good money to make your investments.

Additionally, getting rid of debts is one of the best ways to become more financially focused, and your goals in life will appear more realistic when you have managed to clear all the debt that you had to begin with.

Additionally, you must have a clean slate to start your investment with. When there is no lingering debt, you will be able to make a greater impact on your investment since all the money available can be channeled towards making the investment more successful.

 

Have a Budget

It won’t be helpful for you if you are saving into an investment account but cannot pay your bills. Be sure that you set aside the money you need for your investments, but do not forget to have a budget that will list your most important expenses. With a monthly budget, your money will be used in better ways, and you will also be able to determine how much can be used towards your investment.

The mandatory expenses and the spending that is not necessary, such as entertainment and eating out, can be listed to ensure that you know whether you still have money left over for investing once you have handled all the other expenses. When you have a budget, your investment goals will be much clearer, and you will not have any problem getting the money you need for your investment set aside.

 

Do Not Forget Emergencies

Financial emergencies are usually unexpected, and they can make your budget null and void. As such, you must put your money into an emergency fund that will protect your budget and other funds if you have an emergency.

The funds in the emergency fund will be easier to access when you are in a hurry, and this means that you will not have to resort to the other funds you had saved up. Thanks to this special account, you will also have a means of paying for emergencies whenever they occur.

Once you have made the budget and set aside all the money you will be spending, you will be able to find out the money that you can commit to your investments each month. You must be setting aside some money each month for your investment to become successful. A lump sum is harder to manage and will often divert you from your financial goals.

However, monthly payments are easier to manage. You will barely notice them increasing and your investment growing to the level where it can comfortably take care of all your expenses and monthly income.

You will also be able to achieve your financial goals sooner when you are setting aside some money each month instead of waiting for a while for the money to accumulate before you can start investing. It doesn’t matter the amount you are setting aside each month for your investment.

It can be as little as $10 or as high as $1000. the point is that the amount should be right for you and something that you can comfortably set aside to contribute to your greater financial goals in life.

 

How Is It Possible to Invest a Small Amount?

If you have small amounts of money that you are willing to spend, you should not be afraid of investing it. That little amount will have a greater impact in the future if it is invested as opposed to when you do not invest it at all.

But first, let us look at the requirements that you will have to complete to start investing money in individual stocks, mutual funds, index funds, and bonds. First, you need to open an account with a broker.

Some bank accounts will permit you to invest your money using your account, and you can also work with an online broker, which gives you the advantage of dealing with an independent brokerage firm. Whenever you are investing small amounts, it is crucial to ensure that your broker has support for features like:-

 

No minimum balance fees

Investments can go up or down, and if your broker has a threshold for a low balance fee, you will find yourself below the line when the value of the stock you have invested in drops. As such, the broker must offer no minimum balance fees since this will permit you to invest small amounts.

 

No commissions or transaction fees

Transaction fees and commissions are factors that make people not invest small amounts of money.

However, some brokerages offer unlimited trades without any commission, which is becoming a growing trend. When you invest with a broker that offers this feature, you will be able to invest with really small amounts, making your investment valid even when you only put in a small amount each month.

 

Fractional Share Purchases

Fractional shares are investments where you can buy less than one share of a certain stock.

Typically, brokers will only allow for fractional shares when a stock split or dividend reinvestment has resulted in fractional shares. You might want to invest in a company but find their shares are very costly.

This should not be a reason for you not to invest in the company since the fractional shares allow you to buy a fraction of the share you can afford. This is important and enables you to invest in the companies you like and are confident they will bring you great returns on the amounts you put in.

Fractional shares give you access to expensive shares by letting you purchase a fraction of the shares instead of buying the entire share. Buying the fractional shares directly means that you have fewer limitations when you are investing, and as such, you will be able to invest as little as you have.

After choosing the broker that offers the above features, you will be more confident that you can invest as little as you can each month. With the barriers to entry removed, you will now be ready to make your first investment.

There is no right or wrong time to start investing, and you can invest whenever you feel like it. Ensure that you are well informed when you undertake the next step after choosing and opening an account with your broker.

 

Set Investment Goals

Even when you invest a small amount each month, having goals can be quite useful. These goals will enable you to be focused on your investment, and you will also not veer off the path you had intended to follow in your investment journey. The goals should be realistic and spread overtime where the investment will have had time to grow.

The use of goals also ensures that as an investor, you will be entitled to make adjustments whenever you feel that you are not making the progress that you had intended to with your investment. These goals will also ensure that you are meeting your monthly investment goals.

When you can put aside the minimum amount each month towards your investment, you will be able to maintain the growth rate for the investment, which means that it will be steadier and more sustainable. Long-term saving, for instance, will require that you have set aside goals that will enable you to stay on track and avoid the dangerous distractions that are along the way.

 

Robo-advisors can Help for Investing in Small Amounts.

Whenever you need to invest a small amount of money, you can have a Robo-advisor do the investment for you. They make investing easier, and even when you do not have any experience in investments, the Robo-advisor will take all the pain and frustration out of investing.

The robot-advisor works by asking some questions to find out your risk tolerance and financial goals. Once this is done, the robot advisors will then use algorithms to determine the low-cost stocks and bonds to invest in.

They will also balance your portfolio and optimize it over time using machine learning algorithms that adapt your investment strategy overtime to make more profits from your money. Usually, this software only requires a small amount to start, and they do not charge hefty amounts due to your account’s size. They are also automated and worth the effort.

They can help you manage the small money that you have and invest it into bonds and stocks that can be balanced out to become profitable in the long run. The use of a Robo-advisor is cheap but worth the investment since you will be saved from the tons of work involved in getting your investments balanced out.

 

Real Estate Market

In the past, people usually required a lot of money and excellent credit to invest in the real estate market. However, this is no longer the case since real estate crowdfunding has allowed investors to own fractional shares of massive commercial properties.

They do not have to worry about being the landlord, and you do not have to put a lot of money into one investment. Real estate investments usually require greater minimum investments than Robo-advisors, and if you have more money, you can opt for the real estate investment.

Additionally, investing in real estate does not necessarily mean being involved with the stock market. The idea of crowdfund investing means that you will be sharing the cost and risk of the investment with the other investors.

 

Low-initial-investment Mutual Funds

These are the kind of investment securities that let you invest into an entire portfolio of bonds and stocks using a single transaction.

They are the ideal choice for new investors, and when you are willing to make a monthly investment, you will be allowed to invest in mutual funds by the companies that have them. This is a good thing since there is a low barrier to entry, and you will be able to make automated payments.

The use of automatic investment is also convenient when you need to make your investment through payroll savings. This can be set up with a little help from your human resource department, and the deductions will be done automatically at the end of the month from your salary.

As such, you will be able to keep a mutual fund running with the little that comes out of your salary, and the returns will be even greater since you will have invested into a portfolio of stocks and bonds compared to investing in a single stock.

Mutual funds are easier to manage and have greater returns in the long run, but the most attractive thing about them is that they are less risky than the other types of investment. They have been researched and have the right balance of stocks and bonds to ensure that they can always make a profit regardless of the prevailing market conditions.

 

Online and App-based Investment Platforms

The internet and smartphone revolution has made things easier than ever. Online and app-based investment platforms make it easier for you to invest.

They have low minimums and barely any transaction costs, which means that you will easily invest in these platforms. Additionally, these app-based investment platforms enable you to invest from the comfort and convenience of your mobile device.

As such, you will no longer have to worry about losing touch with the world of investment. They use the information to ensure that your investments are done correctly, and your money is going to the places it is supposed to.

These platforms are easier to access, allowing for multiple sources of funding. As such, they can easily be accessed from the comfort of your home, and you are at liberty to take your time going through the different available investment options.

 

Remember to Diversify

Even when you are investing with a little amount, diversification is still important since it will prevent you from running into losses when the few stocks that you have invested in plummet.

Additionally, being able to diversify means that the performance of your portfolio will be easier to keep track of. Balancing your investments to stop losses will also be easier when you invest online or use fractional shares.

By diversifying your investments in different places, you will also be able to explore and discover new types of investments that you can consider for the future. There are many promising investments that you can make, and they can bring you good returns in the long run. As such, always ensure that you spread out your investment to minimize losses.

Even though investment might seem harder when you start, it gets easier with time, and as you keep investing, your future will be much better, and you will find yourself thanking yourself for this.

Even a small portfolio can include many different stocks and bonds, which means you will have fewer losses to consider. A mutual fund has all this preparation for you, and when you can find one that requires minimal investments, you will be all set and ready to go.

 

Be Consistent

No matter how much you are investing, consistency is important and will help you stay on the right track and make the right kind of impact with your investments. Whenever you are more consistent in your investing pattern, you will soon find investing easier than you had even imagined.

Investing regularly also means that your money will be going to the right places, and there will be fewer chances of you spending the money meant for investing on things that will not help you in the long run. As you consider investing, be sure that you are dedicated to making your investment and looking for the money you will invest for the month.

This will enable you to be more successful in the long term, even when you are only investing a little amount each month. Your dedication, hard work, and patience will ensure that your investment pays off beautifully and you are on your way to gain and profits.

 

Conclusion

Whenever you are investing, you might be discouraged that you only have a little money to invest. However, this should not be the case since the world of investing has made it possible for you to impact with the little that you have. Investing has no minimums and maximums, and as such, you can easily start investing with a little money.

The good thing is that your investment will grow over time, and you will be able to get some decent returns from the little that you put aside every month to go towards your investment. Start investing today and make a better future for yourself with the returns and dividends that you will get from your investment.