Building Wealth Without Being Wealthy

It can be hard to put money in investments when you don’t have a lot of money to spare. Many investment firms and mutual funds require a fairly high minimum investment. This is especially true for those just beginning their careers. However in investing time means money thanks to the magic of compounding interest. Here is what you need to know to get your foot in the door, even if you don’t have a lot of money to begin with. First I’ll start with an obvious piece of advice; for those of you lucky enough to have a 401K plan at work be sure to contribute whatever is necessary to ensure your employers maximum contribution. In investing free is always good and you should do whatever you need to maximize the amount of ‘free’ money you receive, especially when it comes to planning for your retirement. Another great, relatively affordable investment tool is an index mutual fund. An index mutual fund consists of a number of different funds all related to a certain index, that index may be an industry, product or location. Mutual funds are typically smart investments because they are a great way to easily diversify your investments, meaning you don’t put all of your eggs in one basket minimizing the amount of risk you take on. Charles Schwab offers index mutual funds for as little as $100 each. You could purchase a few of these funds in order to put together a starter portfolio. If you prefer that somebody else takes on the work for you there are companies that offer investment options around the $1,000 range that they’ll look after for you. A third option to consider is an automatic plan. For mutual funds that typically require a larger minimum initial investments, you may inquire about setting up an automatic payment plan. These plans require that you set up some amount of money be automatically taken out of your savings or checking account for a certain number of months until you reached whatever amount they require. This allows your to purchase an investment plan that would otherwise be out of your reach. Another option is to purchase index exchange traded funds. Index exchange traded funds are similar to index mutual funds except for the fact that they trade like stock on the stock market. These funds typically don’t require a very high minimum investment and can be great for tax purposes because many are offered commission free. When purchasing these ETF’s it is important to again remember to diversify. It’s normal to be nervous about getting into the market, especially if you don’t have a lot of spare funds, but it is important you do so. These options serve as great ways to start small and hopefully finish big.