When you read stories about the stock market soaring and Bitcoin selling for $40,000 a coin, it’s easy to feel the Fear of Missing Out. A healthy fear of losing the money you can’t afford to lose might balance out the FOMO. Somewhere in the middle, you can assess whether you are ready to start investing in stocks or buying crypto, hoping for the chance to make your money work for you.
How to Start Investing or Buying Crypto with Little Money: The First Steps
You don’t need a lot of money to begin the investment journey — no minimum balance is required for an Investment Account, and you can start buying crypto for as little as $1 per transaction. But it’s smart to only invest with money that you can put aside after meeting all your expenses — including saving for an emergency or a vacation. You will hear that investing in the stock market, for example, involves a certain amount of risk, which means you could lose your investment. Stock purchases in large companies with a long history of making profits are usually — but not always — less risky because they are expected to continue having success. You could also invest in federal treasury bonds, which are backed by the US government and considered extremely safe. But the interest rate on those bonds usually won’t match the rate of growth of stock in a healthy but riskier company.
If you decide you have the money to invest or if you are interested in buying crypto, understanding your finances and your ability to invest is key to knowing how much you can afford.
1. Prioritize Your Needs
If your employer offers a 401(k), think strongly about enrolling. A 401(k) lets you put money away toward retirement with pre-tax earnings. So if you put $1,000 of your salary into the 401(k), it won’t be taxed until you take it out (hopefully after you retire). That lowers your tax bill and can get you started in building your savings. You can usually choose what kinds of stocks, bonds or other investments your money will go into. The organization AARP, which is a US-based interest group focusing on issues affecting those over the age of 50, provides this chart to show how one employee benefits by putting money away over several years.
2. An Investment Account Offers Options
Once you have concluded that you can afford to start investing, check out Investment Accounts. There are some who offer a fully managed, diversified core portfolio, and you can add portfolio themes as you choose. You can adjust how much you invest in your core portfolio model vs. your portfolio themes at any time.
3. Curious About Crypto?
There are tons of platforms providing an easy way to buy, sell, and hold cryptocurrency. Whether you’re a crypto newbie or a seasoned crypto investor, most platforms provide access to popular cryptocurrencies — Ethereum, Bitcoin, Bitcoin Cash, and Litecoin.
4. Auto Invest keeps your investments and purchases going
Look for a platform that offers Auto Invest, which allows you to regularly put money into an investment account or buy crypto. Auto Invest lets you decide how much to invest in your accounts each month, as well as the frequency of the deposit. The money automatically goes toward the purchase of the ETFs or crypto that you choose.
Auto Invest is an easy way for you to build up your Crypto or Investment Account portfolios. Some allow you to put your crypto purchases on autopilot with dollar-cost averaging, and you can turn it off or adjust it anytime.
