4 Simple Ways to Start Investing

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The following article is a guest post by Miranda Marquit from Yielding Wealth.

Investing can seem daunting at first. And getting started can seem especially concerning. There is so much to know, and it seems (especially recently) that investing is fraught with pitfalls. But the truth remains that investing can be a good way to get your money to work for you, providing an income for your later years — and even an income stream for now. No matter your goals, you can start investing now by following these simple guidelines:

1) Start small. You don’t need large amounts of money to invest. There are some online brokers that will allow you to open an account with as little as $250 (although $1,000 – $2,000 is more common). Some mutual funds will allow you to open an account with such a small amount as well. And if you have a retirement account, it is sometimes possible (especially through your work) to start with almost any amount of money at all. Use small amounts until you get used to investing.

2) Invest regularly. Make it a habit to invest at regular intervals. Whether it’s weekly, monthly or quarterly, try to make regular investments of the same amount. This will get you in the habit of investing. This is easy when you have a retirement account at work, and you can arrange to have part of your paycheck diverted to a retirement account before you even see the money.

3) Direct deposit into an investment account. This goes hand-in-hand with #2. You can use direct deposit or an automatic transfer to help you move money regularly from your checking account into your investment account. Setting this up automatically makes “remembering” to invest much easier.

4) Consider index funds. If you are wary of stocks, and unsure of yourself, you can start with index funds. Index funds invest in all the stocks listed on an index — such as the S&P 500 or the Russell 2000. There is even an index fund that allows you to invest in all of the companies on the Dow Jones Industrial Average. Index funds may not provide amazing returns, but they are usually steady. Besides, over the long haul the stock market improves. Index funds can help you build a solid investing base and help you gain a little more confidence.

The important thing is to start investing. If you start small and relatively safe (there is no such thing as a completely safe investment), you can learn more about investing and do more research into other types of investments and companies. But you need to get started. The earlier you begin, the more time your money will have to work for you.

Miranda Marquit writes about personal finances for YieldingWealth.com. She also edits information on debt consolidation for DestroyDebt.com.

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