Have you been putting off investing because you think it requires a huge sum of money at the outset? If so, you could be missing out on an important monetary opportunity. Investing with small amounts is absolutely possible, and for the single mom, it may be the only option. Even if you don’t have thousands to invest, you can start earning an income on your money.
How is this possible? Consider investing in a low cost mutual fund or other similar product. Talk to an investment advisor and start building a diversified portfolio, even with your small investment amount. Another option would be to invest in your own portfolio using exchange-traded funds, which are similar to stocks, but track a specific index, such as the S&P 500.
The only way to make investing in your own portfolio work is to find a way to invest where the transaction costs are minimal. For instance, you can invest online through ShareBuilder at just $4 per trade. When you sell, you will pay $10. Some similar online investment options give a number of free trades per month.
When investing on your own, you can minimize the amount you pay for fees if you save your small amount and invest quarterly. For instance, if you have $100 a month to invest, consider saving that until you can invest $300, and then buy a share in a few different exchange traded funds. If the broker charges a flat fee, such as the $4 from ShareBuilder, your percent will be much lower. Investing in multiple funds helps diversify your portfolio and help it to ride out economically difficult times.
Whether you invest with an investment professional or do the work yourself, the point is that you can start investing with small amounts, and you need to do so as soon as you can free up some money. The economic downturn will not last forever, and you will put yourself in a good financial situation if you buy in now while prices are low, because you will be able to sell later when things make an upward swing.
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