You don’t need a large chunk of money to begin saving or investing, what you do need however is a clear idea of why you are saving up. If you can picture the end goal, it can make the days you’d rather spend than save a little easier to take. It doesn’t matter if it’s $5 or $5k. As the saying goes, there is no time like the present to get a start. But it should be stated, that you’re likely to get a better return from investing in stocks, more so when you use automated trading software than you are likely to get when throwing money into a bank account.
Let’s say you have around $50 a month to tuck away. What should you be doing with it? Well, firstly is it for an emergency fund or is it you saving for something specific? If you are saving for something specific, say a down payment or a holiday then you’re money is going to be better of in an ISA or savings account with high interest. Reason? You’re going to need it somewhere in the next 3 to 5 years. If you drill down a bit more, the ISA is the way to go here. If you just want to see what $50 a month can do over the long term, say 5 – 10 years then stock markets are going to be your friend here. You should opt for a single investment fund and think about switching future contributions to a different fund later down the line. This means you’re going to slowly build up a healthy selection of stocks that you have cash in. Cashing out in ten years’ time is going to be pretty sweet.
If you are looking to stash $250 and over a month, then practically speaking you can invest in a lot more places and more quickly. You will be exposed to more asset types, and the excitement here is because each investment will take a different road. You’re going to hit to ground with a diverse portfolio and be able to check out different markets too. An equity income fund is an excellent way of getting exposed to the stock market and is less likely to see the same fluctuation as a growth oriented fund.
Whichever you choose here you, you need to take in reviewing your investments every six months – much like the dentist.
If you have the stomach for it, which will really come down to your risk tolerance, you might like to explore emerging markets. They are volatile and come with a lot of ups and downs, BUT overall they have the potential to perform very well over the long term.
As with any investment or savings, make sure that it suits your financial position and that you never put more into a fun than you can afford to lose, seek financial advice from a professional or use a platform that is designed for people who are learning the industry.