When I want something in another room, I send my son to get it. It’s what kids are for. The best way to get work done is to get someone else to do it for you.
That’s the principle behind investing. When you invest, your money does the heavy lifting. With $25 and a willingness to automatically transfer money into your investment account each month, you can enjoy the benefits of letting your money work.
Get Off Your Assets
No one likes freeloaders. If someone is sleeping at your place, you at least want them to do the dishes. When your money sits in a savings account, it’s sleeping on the couch without helping out with anything.
You’ll never build the wealth you need for financial freedom if you don’t move your assets. Once you have built up a comfortable emergency fund, stop relying entirely on that savings account and open an investment account. It’s easy enough, even if you only have $25 to start.
An Open Relationship with Your Money
Don’t be loyal to one bank account or investment account. It’s ok to work your assets in any way that helps you build wealth.
Start with your company’s tax-advantaged retirement account. If your company offers a 401(k) and you contribute, you’re investing. Use that to your advantage, and take the biggest match possible. Many people don’t think of company retirement plans as investing, but it is.
You don’t need to be a one-account investor, though. If you have the right information, you can open an account with an online discount broker (like TradeKing or E*Trade), robo advisor (like Betterment), or a “traditional” company like Vanguard or Fidelity.
Get your money out there to make an effort with others. I was pleasantly surprised the other day to discover that my regular effort with my money has been paying off. I’ve been contributing to a travel fund, and my money has been busy. It’s worked for me, and with the help of compound interest, is already offering a great return.
When you’re ready to spread a little more canvas with your money, keep the following in mind:
Get personal. You’ll need identifying information to open an investment account. Your name, address, birth date, Social Security number, and bank account information will be needed.
Have your personal information ready. Even if you open an account using the Internet, having it nearby keeps you from being timed out of the session before you’re ready.
Index funds are better to start. They aren’t sexy, but index funds, which follow set groups of stocks, such as the Dow Jones Industrial Average, or the S&P 500, can be an easy way to get the most out of your investing dollar. You don’t have to pick stocks (which can get tricky), and you enjoy instant diversity.
Do it in your sleep. Put your assets to work while you sleep. Schedule automatic transfers from your account to the investment account. Most brokers offer an “automatic investment plan.” Sign up for it. It’s better when things happen while you’re not thinking about.
Start small. Even if you’re broke af, you can still afford to invest. With some discount brokers, it’s possible to automatically invest $50 a month. You eventually need to step it up and show your investment account some love, but starting small gives you the chance to let your money begin. The long your money is at it, the greater the chance you’ll see bigger results down the road.
But you still need to boost your contributions over time. As soon as you can, increase the amount you invest. You don’t want to sit on your assets when you have them. They should be out working hard for you.
The following, from Calculate My Wealth, shows you how you should be working your assets. Start investing $100 per month at age 22, and do it until you’re 65, and here’s what you could have:
Unlike investments, that savings account is definitely a freeloader.