Don’t Wait Until You “Have Money” To Start Investing (How To Start With Just $5)
In 2014 I set up a meeting with a trusted money mentor. I was serious about improving my financial life and was ready to have that “how should I start investing” conversation. Unfortunately, it didn’t go as planned.
I sat down at a local cafe with my mentor, excited to hear his pitches on the latest and best investment options. What happened next stayed with me for a LONG time.
I told him how much money I had to get the ball rolling. His response? He LAUGHED.
Then he went on to say, “if you can’t invest at least $1000 a month, then you shouldn’t bother.”
I trusted this person with a sincere question. But not only did I leave feeling embarrassed, I felt ashamed.
I thought I was doing the right thing only to discover I was clueless. Apparently, according to him I wasn’t ready to start investing.
I carried that shame and embarrassment until 2017. It was then when I decided I wasn’t going to WAIT anymore. I knew needed to start HERE, NOW, with what I have and what I know- or I’m never going to start investing at ALL.
Because let’s face it. Most of us have this attitude about investing…
“I’ll start investing when I have more money.” Unfortunately, most of those people are still waiting for that “more money” to come in. I know I did!
My money mentor experience was painful, but it also led me to the best investment tip EVER. Don’t wait until you “have money” to start investing.
Act like you have a lot of money NOW.
Money likes to hang out with money. It’s natural state is to compound. It doesn’t know bad (interest on debt) or good (interest on savings). It just knows to stick together. So directing and saving even the smallest amount, can attract MORE.
Which is why starting with what you have NOW is key.
The biggest lie I ever heard was “If you don’t have 1K a month, don’t bother”. We are re-writing the script today. Start investing with what you have, and start making steps to KEEP more of the money you make.
Whether you have savings that you’re not sure how to use, you received a lump sum of money that you’d like to squirrel away, or you only have $5 to invest, there’s an option for you!
Most of all, getting started with any investment options will get you into the investment mindset. THAT is the secret weapon. No matter what your bank balance says, treat each penny with intentions to invest.
Now, before we begin, I’m going to be transparent. Some of the links I’m sharing are affiliate links, others are not. And I’m not offering investment advice, just sharing my experiences.
Consult with your CPA or other professional before making any big-time investments. Cool? OK!
Let’s get your investment party started with four tiers to suit anybody’s needs.
No-Risk, Short Term Investments Starting At $5 (For Real!)
Option #1: Consider A High-Yield Savings Account. High-yield savings accounts are easy to open, and many of them don’t have a minimum balance. Even better, you get a return on your savings! Local credit unions are the best. They can offer higher rates than some of these “Big Banks”. I know mine offers 6% on the first 1K. This is a lot more than my other .44% interest earning accounts.
Do you know how much your savings yeilds you? Did you sign up for a new bank and get a sign up bonus only to pay it back in minimum fees? Be sure to read the fine print before committing.
If you want to double that $5, negotate with intention to invest. Find ways to save a buck or two, ask to remove bank fees, and move what you saved into an account with a high return.
Setting up a high-yield savings account is quick, easy, and inexpensive. Best part? No matter how much you invest, it helps you shift your mindset from spender to investor!
Option #2: Round-Up Savings. Lots of places offer round up savings (maybe even your own bank!) Its an automated service where they round up your purchases into a savings account.
They usually play in the Stock game, so you get higher returns than a savings account (be sure to read the fine print for any fees.) I use Wealth Simple for my Round up option.
UPDATE: Wealth simple is now Betterment. Here’s how you can find out a little bit more about them via my special affiliate link HERE.
Option at ANY Amount: Debt as an Investment (Instead of a Shame Source). Trust me, If you have any kind of debt, you’re not alone! So give yourself a break and let go of the shame.
Then, try shifting how you think about that debt. Here’s what I mean by that…
What if you chose to think of paying off your debt as making an “alternative investment?” Think of it this way. If you have $30,000 of debt, you’d need about $25,000 in investments giving a 4% average return just to make your minimum monthly payments. Sounds like a hamster wheel, right?
But instead of losing yourself in shame and believing that you can’t invest until the debt is paid off, think of paying off debt as an investment in your future.
Take the shame out of it, claim your role and responsibilities, make a plan, and take action. This will help you shift your energy–and your bank account–back into the black ink!
Low Risk, Longer Term Investments From $10+
Option #2: Roth or Traditional IRAs. I preference ROTH IRA. A ROTH is an individual retirement account that allows you to pay taxes on the money you put into it now, not later. (You plan on making more later right? Let’s save you the future taxes too).
With Traditional IRAs you could qualify on the tax breaks NOW, but it heavity reliant on your Adjusted Gross income. Talk with your tax professional to see which option offers you the best benefits.
OR, you can just get started with as little as $10. Really. Just start 🙂
There are a few specific withdrawal & contribution rules for ROTHs (check those out right here!) if you need future access. There are also some noteworthy contribution limits, too.
If you are starting with $10-$100/month you don’t be an investing expert–or even need to consult with one one– to get started.
If either a Traditional or Roth IRA is a good next step for you and you wanna get started, check out Betterment to get started!
I use Betterment for my retirement accounts, and it couldn’t be easier! You can set up automatic monthly transfers, grow your account, and get some pretty decent returns, and with minimal effort. Your local bank also offers these services. You can always rollover to a new company if you have grown out of DIY.
Option #3: Stocks. I started with $20 month! I like Robinhood because it really assisted my journey in flexing my Investment muscle and expanding my comfort zone. I’m by no means a stock trading expert, and Im not relying on this as my main component of my financial plan. (Some of my other peers do and are successful, but I’m definitely more conservative!) But this is part of Wealth Journey of STARTING NOW, not when it’s perfect.
I only invest what I feel comfortable losing (conservative, lol). You have the flexibility to choose your own comfort zone, too!
If you also stay conservative and know your limits financially. you don’t need an expert to get started. Once you hit those bigger, more exposure limits like $500/mo+ you’ll definitely want an advisor or professional on your side to guide you.
If you are playing the Stock game solo, be sure to schedule a call with your Tax professional before the end of the year to review any possible capital gains you need to plan for.
I’m all about ease. And after talking to a few professional investor friends, I made the switch from Etrade to RobinHood for my stock investments. It’s proven to be an easy option.
Etrade is also an option. They just have more requirements on minimum investment deposits, timelines, etc. I found that I needed a little more “freedom” with my limited knowledge. Not only that, but I didn’t want to invest more than $20 or be forced to learn the rules before I was ready.
Flexible Longer Term & Medium Risk Investments: From $500-$1000+
Option #1: Peer-To-Peer Lending. How does this work? In short, people borrow money for what they need (starting a business, home renovations, debt consolidation, etc.). People like us then lend them the money.
This is where organizations such as the Lending Club come in.
The Lending Club is not a bank, it’s a lending house. And lending houses can give you impressive returns. Not too shabby!
How does it work?
To open a self-directed investment account, the minimum deposit $1000. You choose the loans you want to invest in, or choose an automated option. Once an account is funded, there’s a minimum $25 investment per each Lending Club note.
If you ever need to take your money back before the note is up, you can put the loan up for “sale” and get your principal back.
I refer to Lending Club first as I know them the best, but there are other lending houses as well! So check them out, and keep peer-to-peer lending in mind when considering your investment options.
Option #2: REITs & Land Banking, A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds (similar to the above concept), REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.
I invest with DiversyFund. I invested a one-time $500 payment to test the waters, after vetting them personally. The first question you always ask when entering a contract is “how do I get out of it?” (Always know your exit plan, right) 😉
As of this writing, with DiversyFund, it’s been “so far, so good!” I like these types of investments because they aren’t as volatile as stocks, they’re pretty liquid, and they grow faster than a savings account.
Land banking is the practice of aggregating parcels of land for future sale or development. It’s a similar concept to the above two (mutual funds). I am licensed as a broker in Life, Accident and Health Insurance with a company that specializes in Land Banking. So if you want to learn more- let’s chat!
So there you have it! Different tiers of investing that you can use no matter where you are on your financial journey. None of them require big cash flow, a professional, OR to investment expert status. You can simply START where you are NOW.
The number one investment you ever make is in yourself. So do something amazing for your future self, and start investing like it’s all happening NOW.
So how about you? What are your thoughts on investing? Ever been too afraid to start investing because you don’t feel like you have “enough money?” Tell me about it in the comments below!
Until Next Time…
Love, Light, and MONEY, Honey…
Kaylee