There’s no denying that the idea of investment – the cultural concept of it – is one that carries a certain amount of prestige. For those that have never invested, it may seem like a longshot, a goal up on the bucket list alongside owning a yacht.
In reality, investing is a smart, sound financial path open to all individuals – not just ones that already have significant wealth. In fact, investing small amounts of money consistently can build a portfolio in less time than you likely imagine.
Psychology tells us that money-related or no, doing anything on a regular basis makes you more likely to continue doing it. When you normalize setting aside a certain amount for investments on a regular basis – say, with every paycheck you receive – you’ll be surprised how quickly it becomes second nature. Consistency is the key to investing, particularly with smaller amounts. When you commit to weekly, bi-weekly, or even monthly investments of the same amount, you’ll be able to grow your portfolio in a measurable way without hurting your wallet.
Investing small amounts of money over time is hardly a revolutionary concept, but it’s getting more endorsement than ever before. As cash-strapped millennials and their younger counterparts eye retirement in an employment field sparse on pensions, buying “parts” of stocks or making “micro-investments” through apps give them more financial hope for their golden years. The best way to match investment strategies to income, however, remains working with a professional: apps can’t offer the customized financial guidance that they’ll need as their investment grows.
Certain investments, even ones that are only funded $10 or $25 at a time each week, can help shave tax liability down to manageable levels. When an investor works with a professional to find the right investment vehicle for their consistent deposits, they can opt into programs or accounts that shield them from taxes or defer taxes to a later date. This can help keep them in the desired tax bracket, or lower their overall “on paper” income alongside a spouse or partner’s to lower their tax payment requirements.
Believe it or not, by adhering to the myth that a lot of money is needed before investment can begin, a lot of people end up cheating themselves out of free money. By skipping out, for example, on a workplace 401k matching, they’re leaving that match on the table when they could be pocketing it for their future. When you consider it could be 4% of your total salary, setting aside 2% doesn’t seem so painful in the short term. Interest rates on bonds, investment accounts, and other investment vehicles can fluctuate with the market – but a 401k match, taking advantage of consistently? That’s a guaranteed return on the match percentage, no matter how volatile the market may become.
If you’re ready to wade into the lucrative waters of small investments over time, work with a financial professional to find the best path for your needs and budget. You’ll likely be pleasantly surprised at what you can accomplish in only a matter of weeks, and the benefits will last you well into your old age.
Stocks traded lower today, pulling back from record highs as...
The Nasdaq closes at another record as Big Tech jumps...
Stocks climbed for a second day to record levels as...