Investing can be daunting, especially if you think you need heaps of money get started.
But the fact is you don’t need to be super wealthy to get the ball rolling; in fact, there are many different options available if you’re interested in starting with a small amount of money.
In no particular order, here are some super simple, and smart, ways to start investing that probably won’t break the bank.
Is investing right for you?
There’s no point getting starting investing unless your finances are in order. Otherwise, your plan to commence investing could lead to financial pain, instead of gain, down the track.
That’s why it’s a good idea before leaping into investing to set up an emergency fund, assess your account after-tax income and expenses, and assess your household budget.
Get rid of debt
Similarly, it’s not advisable to jump into investing when you’re still carrying high-interest credit card debt, especially if you’re only considering investing a small amount of money.
That’s because if you’re not careful you could end up paying more in interest on the dollars you've borrowed, for instance on a credit card, than you're earning by investing.
Get back to basics
These days, thanks to technology, you’ve got a myriad of cheaper investment options easily accessible and open to you, including online and smartphone-based choices, even if you’ve only got $20 to play with.
Still, if you want to save on fees and stay low-risk, there’s always the piggy bank or coin jar. You’ll likely be amazed at how your money accumulates if you put aside regular savings.
Open a savings account
If you’re ready to take the next step, an easy way to help your money grow is to open a high interest savings account. While strictly-speaking this is not an investment, it’ll help your money grow.
The great thing is that you don’t generally need a stack of cash to open a savings account. Make sure to look around for the best option for you and then let compound interest do the rest!
What about round-ups?
Recent smartphone tech has ushered in a wave of micro-investing apps that enable you to invest small amounts in the share market by “rounding up” daily card transactions.
There are many options out there that allow users to invest this “digital spare change” – some with amounts as small as $5 – by linking card transactions to investment portfolios.
Spaceship Voyager, for instance, is an investment portfolio app that lets account holders invest small amounts into one of two managed funds, meaning users can start investing from their smartphones with less hassle – and money -- than conventional brokerage. As always, think about whether this product is appropriate to your circumstances.
Don’t forget about super
It’s smart to think long term. So, it also doesn’t hurt turning your mind to retirement and considering your super options as it’s open to you to make voluntary contributions.
It’s important to choose a good fund and look at the fees and long-term returns remembering that past performance does not guarantee future performance.
Remember, time makes an enormous difference to how your balance pans out.
For example, if your total annual fees and costs were 2 percent of your account balance, rather than 1 per cent, your final return could be considerably reduced over a 30-year period.
With a long working life in front of you, it can pay to consider a higher growth option which may be more volatile in the short term but may pay off in the long term. There are also particular funds, such as Spaceship Super, that are specifically geared to millennials.
Invest in knowledge
Like anything, investing comes with risks so the quicker you get your head around the subject, the more chances you’ll have to make savvy market moves and hopefully not lose your $20.
So, make sure to jump online and get educated on investment basics as well as broader economic concepts such as interest rates, the economy, foreign exchange and government policy. This will give you a better chance at making smart decisions with your money.