(MoneyHippo.com) – Investing remains one of the best ways to grow money. But when you’re living paycheck to paycheck, how do you start? The truth is, you don’t need a lot of money to start. Investing on a shoestring budget is entirely possible. Still, it’s important to eliminate as much debt as possible before you start. For example, if you’re paying out 10% in interest to a credit card company and only bringing in 6% on an investment, your wealth will shrink. Once you’ve eliminated those obligations, here are a few easy ways to start an investment journey.
- Checking: Instead of keeping money in a regular checking account, consider choosing an interest-bearing one. In exchange for paying interest on the money, the bank might have some parameters you must follow — like keeping a minimum balance. This type of investment is hassle-free, and a checking account is likely something you already use.
- Stocks: These days, investing in the stock market is easier than ever. Several online brokerages let you open an account for free and have no minimum investment requirements. You can either make your own trade decisions or ask an advisor for help, depending on which one you choose. TD Ameritrade, for example, has commission-free trading, and you can invest in various instruments like stocks, options, and ETFs.
- CDs: Certificates of deposit (CDs) are like savings accounts that you can’t touch for a certain time. While the money sits in the CD, it typically earns a better interest rate than in a regular savings account, and you have a guaranteed rate of return — unlike the stock market. However, an early withdrawal will trigger a penalty. If you stick to the terms, it’s an easy and safe way to grow money.
Remember, you don’t need a lot of money to invest, but if you want to be successful, be consistent. Regular investing, even in small amounts, snowballs over time.
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