Summary: New page: [[Image:Limitedinvesting1.jpg|630px|thumb|left|All trees begin with a seed. Photo by Dustin Moore/[http://www.flickr.com/photos/jollyuk/1989719848/ flickr]/CC]] Your parents always told y...
[[Image:Limitedinvesting1.jpg|630px|thumb|left|All trees begin with a seed. Photo by Dustin Moore/[http://www.flickr.com/photos/jollyuk/1989719848/ flickr]/CC]]
Your parents always told you the best way to grow your money was to invest it, and you?re at that point in your life where you?re ready to listen to their advice. The problem is you only have a few hundred dollars to play with right now. Is it even worth dipping a toe into the market with such a small sum?
Here are some tips on how you can take a minimal amount of money and start your journey toward financial freedom.
==Have a Goal==
Before you do anything, you need to come up with a personal investment strategy. What are your needs, both immediate and long-term? Is it even a good idea for you to invest right now? It?s important to remember that investing is a long-term game, and you don?t want to put away money you might need sooner rather than later. ?It?s important for you to have savings set aside in cash,? Says Beth Jones, owner of Third Eye Associates, LTD. ?You should never put any short-term money in the stock market at this time.?
Jones suggests that instead of investing, a person may want to simply use the money to pay off credit card debt, which will save more money in the short term than you would be able to earn by investing.
==Contribute to a 401K==
If you?re ready to invest long-term, the first thing you should is look into a 401K. If you work for a company that offers a 401K matching program, before you even think about investing, make sure you are taking advantage of your company?s generosity. If they have a matching program, whatever money you put in (up to a set percentage limit) they will match and also put in for you- doubling your investment right from the start. Even if they don?t match your contribution, a 401K is a great long-term place to put your money.
==Diversify==
If you decide not to contribute to your 401K, or if you are already contributing through other means, then you can dip your toes into the market with your funds. Unfortunately, with the amount of money we?re discussing, you?re not going to have a lot of help. ?Small investors are going to have a hard time getting an advisor with two hundred dollars.? Warns Jones. This means you need to do your homework, and know what you?re getting into. ?What they would want to do is buy a mutual fund that has an asset allocation program.? She says. ?Basically, what you?re buying is a fund that is broadly diversified so that whether you?re putting in two hundred dollars or two thousands dollars, you have an entire portfolio that is well diversified and balanced for your timeline.?
In other words, don?t stick all your money in that one company your uncle told you about. Not only would that put you at great risk of quickly losing it all, but you?d miss out on opportunities that could otherwise improve your portfolio. ?The real key to protect your money is to have the diversification,? explains Jones, ?so that you?re not missing any parts of the market where the opportunities might be at any given moment.?
==Go No-load==
Jones strongly suggests looking at mutual fund companies that offer No-load investments without a lot of additional feeds. A No-load investment is a bare bones investment that includes no advisors, no one actively managing your account. This means you?re not paying commissions on anything you earn, and your internal expenses are fairly low.
Two companies that Jones recommends are T. Rowe Price, and PAX World. Each of these mutual fund companies run industry-respected, No-load, asset allocation programs for small money investors. But before you jump in, be sure to read the fine print. ?Sometime those mutual funds will require a systematic investment,? says Jones, ?but that?s usually like $50 a month so you can start to build some assets.?
==Have No Fear==
Whatever you decide, the important thing is to just get started. Your money isn?t going to be doing anything for you long-term if it?s sitting in the bank or stuffed under your mattress. Make the choice to invest, get your money in, and leave it alone for now. Don?t worry too much about the volatility of the market. Says Jones, ?For long-term money, the stock market is the place to be. Even though things feel crazy right now.?
''Original article by David Neilsen, Wired.com.''
[[Category:Lifestyle]]
[[Category:Money]]
Your parents always told you the best way to grow your money was to invest it, and you?re at that point in your life where you?re ready to listen to their advice. The problem is you only have a few hundred dollars to play with right now. Is it even worth dipping a toe into the market with such a small sum?
Here are some tips on how you can take a minimal amount of money and start your journey toward financial freedom.
==Have a Goal==
Before you do anything, you need to come up with a personal investment strategy. What are your needs, both immediate and long-term? Is it even a good idea for you to invest right now? It?s important to remember that investing is a long-term game, and you don?t want to put away money you might need sooner rather than later. ?It?s important for you to have savings set aside in cash,? Says Beth Jones, owner of Third Eye Associates, LTD. ?You should never put any short-term money in the stock market at this time.?
Jones suggests that instead of investing, a person may want to simply use the money to pay off credit card debt, which will save more money in the short term than you would be able to earn by investing.
==Contribute to a 401K==
If you?re ready to invest long-term, the first thing you should is look into a 401K. If you work for a company that offers a 401K matching program, before you even think about investing, make sure you are taking advantage of your company?s generosity. If they have a matching program, whatever money you put in (up to a set percentage limit) they will match and also put in for you- doubling your investment right from the start. Even if they don?t match your contribution, a 401K is a great long-term place to put your money.
==Diversify==
If you decide not to contribute to your 401K, or if you are already contributing through other means, then you can dip your toes into the market with your funds. Unfortunately, with the amount of money we?re discussing, you?re not going to have a lot of help. ?Small investors are going to have a hard time getting an advisor with two hundred dollars.? Warns Jones. This means you need to do your homework, and know what you?re getting into. ?What they would want to do is buy a mutual fund that has an asset allocation program.? She says. ?Basically, what you?re buying is a fund that is broadly diversified so that whether you?re putting in two hundred dollars or two thousands dollars, you have an entire portfolio that is well diversified and balanced for your timeline.?
In other words, don?t stick all your money in that one company your uncle told you about. Not only would that put you at great risk of quickly losing it all, but you?d miss out on opportunities that could otherwise improve your portfolio. ?The real key to protect your money is to have the diversification,? explains Jones, ?so that you?re not missing any parts of the market where the opportunities might be at any given moment.?
==Go No-load==
Jones strongly suggests looking at mutual fund companies that offer No-load investments without a lot of additional feeds. A No-load investment is a bare bones investment that includes no advisors, no one actively managing your account. This means you?re not paying commissions on anything you earn, and your internal expenses are fairly low.
Two companies that Jones recommends are T. Rowe Price, and PAX World. Each of these mutual fund companies run industry-respected, No-load, asset allocation programs for small money investors. But before you jump in, be sure to read the fine print. ?Sometime those mutual funds will require a systematic investment,? says Jones, ?but that?s usually like $50 a month so you can start to build some assets.?
==Have No Fear==
Whatever you decide, the important thing is to just get started. Your money isn?t going to be doing anything for you long-term if it?s sitting in the bank or stuffed under your mattress. Make the choice to invest, get your money in, and leave it alone for now. Don?t worry too much about the volatility of the market. Says Jones, ?For long-term money, the stock market is the place to be. Even though things feel crazy right now.?
''Original article by David Neilsen, Wired.com.''
[[Category:Lifestyle]]
[[Category:Money]]
Source: http://feeds.wired.com/~r/howtowiki/~3/LUW9LbllgQ8/Invest_With_Less_Than_%24500
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