Stop being poor and start investing even with nothing left in your budget
You know what the #1 thing is that separates the rich from the poor? The rich own assets, they buy things that make money like stocks, bonds and real estate. The poor have nothing but liabilities, debts and other things that do nothing but suck money out of your pocket.
Problems is, how do you buy those assets that will make you rich if you’ve got no money to start with? Not all of us were born a Kardashian or Kennedy.
How do you start investing with little money and turn it into the kind of fortune that creates family legacies?
I’ll show you exactly how to get started investing with almost no money, where to find extra money to invest and how to get the most out of it. I’m then going to share a special invitation to a free webinar revealing my unique goals-based investing strategy anyone can use.
How Much Money Do I Need to Start Investing?
This is probably the most common question I get on the blog. How much money do I need to start investing? The only other questions that even come close are ones like, “How do I start investing with $100?”
You can start investing with no money. Most online investing platforms have no minimums on accounts and no requirements for deposits. In fact, whether you have $1 or $100 to start investing, the most important point is just to get started!
The graph below shows the power of time even when investing small amounts. Start investing just $50 a month in your 20s and it can grow to almost $185,000 by the time you reach retirement.
Wait until you reach 40 to start investing that same $50 a month and it doesn’t go nearly as far. Don’t let that discourage you though. Even the $42,700 produced on a $50 monthly investment is still a gain of over $27,700 over the 25 years!
We can all find $50 a month. I know a few of you rolled your eyes and I know budgets get tight sometimes. Dig deep though and there’s always something in the budget you can trim back for about $10 a week.
Strategy for Investing with No Money
I’ll share some rules for investing small amounts as well as how much to invest in a bit. First though I want to share a strategy for investing your hard-earned cash.
We’re not going to be talking about stock-picking here. With small amounts to invest, you want to spread your investments as broadly as possible to lower your risk and make sure your money is working for you. We’re going for a stable return, based on your personal goals so you don’t have to worry about your investments.
We’re going to focus on creating a customized investing strategy that let’s you concentrate on what’s important…not trying to time the stock market.
This goals-based strategy is something I developed working for private wealth managers. It’s a big change from the returns-based investing strategy you see on TV and online. Returns-based strategies have people chasing stocks, trying to time the market for big returns and ultimately end up losing money to bad investments and fees.
Instead, my goals-based investing strategy focuses on your specific needs and investor type to create a portfolio of stocks, bonds and real estate investments that grow your money.
The Goals-Based Investing Strategy in a Nutshell:
- Create a mental picture around each of your long-term money goals. This not only helps you understand how much money you’ll need but that picture is going to motivate you to keep investing.
- Use your mental picture to understand how much you’ll need from your investments. That combined with understanding your investor-type will help you know how much to have in stocks, bonds and real estate funds (asset classes).
- Invest in funds that cover these asset classes broadly. Not only does this lower your risk versus investing in individual stocks but it’s also much less expensive.
- Starting with these target percentages in each asset class, you gradually shift the percentages from high-growth to safety as you get older. This is going to grow your money when you can while still protecting it to make sure it’s there when you need it.
There’s a lot of detail in the strategy but it would make this post into a book. Instead, I want to invite you to a FREE webinar where I’ll take you step-by-step in setting up your goals-based investing strategy. Give me half an hour and I will totally change the way you invest for a stress-free strategy that WILL meet your goals!
What I love about this strategy is that you can use it with any amount of money. I’ll show you the no-fee investing site I use in the next section. Even with a $25 monthly investment, you can spread your money across a group of funds to get exposure to the entire stock market, bonds and real estate investments. That’s going to give you cash flow from dividends plus price appreciation to grow the portfolio.
Rules for Investing with No Money
That goals-based strategy will take you a long way but you want to remember a few investing rules that will make your dollar go further. These will apply no matter how much you invest but they become critical when you’re investing small amounts of money.
- Invest on a no-fee investing site like M1 Finance. This is the website I use for our 2019 Dividend Stock Challenge and you’ll never pay a fee for buying or selling stocks. Even on the 88 trades a year made by the average investor according to Fidelity, that’s going to save you more than $500 in fees.
- Most investing sites don’t require a minimum number of trades or a minimum investment but make sure before you open an account. If there is a minimum, save up enough to meet it so you don’t pay any account fees.
- Next to trading fees, expenses on funds held in your portfolio are the biggest cost. Look for low-cost funds like those offered by Vanguard Funds or iShares to save money.
- If you do invest on a platform that charges trading fees, be wary of ‘no-fee’ ETFs you can buy with no commission. You might save the $5 trading fee to buy the fund but these are often the most expensive funds on an annual expense basis. Most of the time, it’s better to pay the trading fee and hold a fund with a lower expense ratio.
How Much of My Money Should I Invest?
Start investing your money and you’ll get hooked! You’ll start seeing your money work for you (instead of always having to work for your money) and you’ll want to see it grow faster.
This begs the question, “How much of my money should I invest?”
It’s probably the second most common question I get on the blog. The old rule used to be between 10% to 15% of your income but that rule does nothing to help you meet your goals.
Is 10% too much or not enough to meet your goals? Who came up with these numbers and how?
It’s an easy rule to follow but, again, the best thing to do is to start with your specific goals in mind. Knowing exactly what your financial goals look like will mean knowing exactly how much you’re going to need to pay for them. It’s something I talk about in that free webinar on the goals-based investing strategy.
How to Find Money to Start Investing
Not quite sure where you can find the money to invest, even if it’s just a little money each month? I’ve listed a few things most of us spend money on that might give you some ideas.
- The average American spends $520 a year on soft drinks and candy, that’s $43 a month plus the five pounds of weight gain attributed to the junk food.
- The average credit card balance is $15,270 and means those carrying a balance pay over $2,100 in interest every year. Pay off those credit cards and save that $175 a month.
- The average household spends $3,008 a year eating outside the home. Eat out one less time each month and you’ll save over $58 every single month.
Meeting your investing goals isn’t about whether you can invest a lot or whether you’re limited to investing small amounts. Reaching that level of financial freedom is more about just getting started investing and creating a customized plan to reach your goals. You’ll be able to invest with little amounts and still have the peace of mind that your money will be there when you need it.