Let me start by saying that this post isn’t for everyone. I know times are scary right now. Many are losing their jobs. Hours are being reduced at work. Schools have been closed, and parents have been turned into teachers overnight. These are unprecedented times, and thinking about investing when you are considering your job prospects and bills may be the last thing on your mind. If that is you, then that is okay. Focus on what needs to be done right now to get through these challenging times.
However, if you are curious about investing, then keep reading. I understand that the stock market is volatile right now, so investing may even seem a bit intimidating or impossible. But it doesn’t have to be if you start small to reduce your risk.
When investing, there is a mantra that says “buy low, sell high.” You buy low because you can get more shares for your money. You sell high because your shares are worth more. Therefore, in this current market, you will be able to get more shares for your money.
However, before you consider investing, please make sure that your bills are current and your needs are met first. Also, if you think that you may experience a future job loss or reduction in income, then evaluate your situation first and determine if now is the right time to proceed.
If you are ready to start investing, this post will show you 5 ways to get started without a lot of money.
- Get connected with Acorns. Acorns is an app that connects to your debit card and rounds up your purchase, then invests the change. This is an easy way to start investing if you don’t have a lot of extra money. You can invest just by doing your essential shopping. Acorns just launched a new product called Acorns Spend. Acorns Spend is a checking account with a retirement and investment account built in that allows you to invest as you spend on your everyday activities. Learn more about Acorns here.
- Leverage your savings. In a recent post, I mentioned some apps that offered cash back. One thing you can do is take the cash back you earn and use that to invest a little at a time. Just imagine if you saved $25 per month on your shopping through Rakuten or Ibotta and then you invested that. At an average return of 6% in 20 years, you would have $11,416. Not bad, considering you were going to spend that, anyway. There are many different places you can put the money, including an investment account with a company like Ellevest, college savings account, retirement account and more.
- Your job’s 401k. I know times are challenging right now, with many people being laid off or having their hours cut. However, if you have a job that offers a 401k and they match (up to a certain point) your contributions, then start small. Consider starting with 1% and as you feel comfortable, begin to increase it. As you are comfortable, increase your contribution by 1 percentage point each year. The gradual increase makes it easier because you won’t notice it as much. This is a great way to reduce your taxable income, and ultimately your taxes, just for investing in your future.
- Your tax refund. Tax refund time is a great time to catch up on bills, increase savings and pay off debt. In addition to those things, you can take a small percentage of your check and invest. It can be a small amount that you do each year, but it will add up over time. If you receive a bonus at your job, you can use the same strategy with that, as well. However, please don’t do this if you are behind on bills, you don’t have an emergency savings, or are facing a financial crisis due to job loss or reduction in hours. Your primary needs must be met before considering investing using your tax refund check or your stimulus check (discussed next).
- Your stimulus check. The Coronavirus Aid, Relief, and Economic Security (CARES) Act recently signed into law was passed to provide COVID-19 economic assistance to individuals, businesses and the healthcare industry. This check will provide $1,200 for individuals and, to parents, $500 per child. More details can be found here. This is a one-time payment that can be used similarly to the tax refund check. Your investment doesn’t have to be your entire stimulus check; it can be a small amount, but it will add up. Again, before you use this strategy, please make sure you are in a good financial position and all of your needs are met first.
Hopefully, these tips provide you some ease and confidence that even in these trying times, you can start or keep working toward your investing goals.