There are many different types of investors. One of the easiest ways to get started in investing is through your employer. If you’re on a tight budget, try to invest just 1% of your salary into the retirement plan available to you at work. The truth is, you probably won’t even miss a contribution that small.
Having an employer matched 401k is a bonus. I’d highly recommend sacrificing and making the largest investment in that account as you can. A few years ago, my deferred compensation account nearly saved my life. Once you make the initial adjustment to automatically deducting a specific amount of your income, you won’t miss it.
Work-based retirement plans deduct your contributions from your paycheck before taxes are calculated, which will make the contribution even less painful. Once you’re comfortable with a 1% contribution, maybe you can increase it as you get annual raises. You won’t likely miss the additional contributions. If you have a 401(k) retirement account at work, you may already be investing in your future with allocations to mutual funds and even your own company’s stock.
Minimums to Open an Account
Many financial institutions have minimum deposit requirements. In other words, they won’t accept your account application unless you deposit a certain amount of money. Some firms won’t even allow you to open an investment account with a sum as small as $1,000.
It pays to shop around some and to check out reviews before deciding on where you want to open an account. My first account many years ago was with E*TRADE. I lost a lot of money, but not nearly the amount I’ve donated to Caesars Palace on the craps tables. If you’re new to stocks I’d recommend looking into your current bank and see if they have an offer for free trades if it’s connected to your main account. I’d also suggest mutual funds until you get the hang of doing thorough research. Mutual funds in plain English are a group of selected stocks that are diversified in advance in hopes of always winning in a volatile market. If you aren’t sure what area of stocks and mutual funds you’d like to invest in… look at the economic climate and where we are heading. My last few stocks were in technology and pharmaceuticals ☺️. We’ll dive in a little more in the next post.
