Everyone starts somewhere. And some of us start a little higher up than others if we inherit stocks or investments. But that doesn’t mean people haven’t 100% self-made themselves when it comes to investing.
Finding how much money should I invest is a personal question. The general rule of thumb is you should never invest more than 10% of your income.
Even if 10% of your income is less than $500 a year. So …
How Much Money Should I Invest?
That’s a good question. Obviously, it depends on how much money you have to start out with. We’re not financial advisors, mind you, so this is just a general guide.
You’re responsible for what you choose to invest in.
With that out of the way, let’s talk about what kind of cash you need to get started. You can invest everything from your spare change to 100,000 – and we’ve broken the article down into spending categories for you below.
Learn how and where you can make your money work for you.
There are two big apps in the market when it comes to investing your spare change and small amounts of money. The most popular one is called Acorns.
Acorns is an app that you connect to your bank and you can contribute to it in two ways – or both. You can set it up to “round up” your purchases. So if you buy gas, for example, and your total comes out to 23.60, then Acorns would round up 40 cents from that transaction.
To keep things more simple, they don’t withdraw from your bank account every time you make a purchase. They add up all your roundups and take that amount out of your bank account (and invest it for you) per week.
Depending on how many transactions you make, this comes out to $5-20 a week.
You can also set up Acorns to invest a set amount of money for you weekly, like $5, $10, $20, or more. If you do both the set charges and the roundups, you’ll start a nice little nest egg for yourself.
The other app is “Robin Hood” it’s the same idea as Acorns, but a different app, brand name, and company. There’s also a greener option (literally) called Stash.
Instead of investing in the traditional market, they invest your money in Marijuana-based businesses.
While it might sound like a strange idea for an App, the Marijuana industry is one of the fastest growing sectors in America.
$100 to $500
Traditional brokerages are going out of the window. Instead, we’re seeing more people invest in pre-made packages, like those offered by Swell. With their service, you pick a set of businesses that mean a lot to you, like women-run businesses or those that have green operating principles.
You can set up a portfolio with just $50 on Swell, so no need to be a millionaire or anything. They’re a pretty honest company themselves, they vow to never invest in private prisons or pharmaceutical drugs.
There’s also M1 Finance, which has a $100 to $500 starting fee. It’s another roboadvising space, where you’re recommended different things to invest in.
They, too have pre-made portfolios you can choose from, or they let you customize your own. Think of it as a choose your own investment-adventure.
If you’re starting at the high end ($500) of this space, you can work with Wealthfront. It’s the same general idea as the others, but you are charged a fee by the people that help you manage your portfolio.
It’s not that much, but it’s something to consider, depending on how much money you’re eventually going to invest.
Talk to Your Employer
A lot of employers have an investment plan they can help you with. Some even come with your job, depending on the company. Tell your boss or your HR person you’re interested in the company investing plan.
Some companies will even match what you invest, up to a certain point. There are pretty strict regulations depending on the company and industry, so if you want 100% customization and creativity, this isn’t the plan for you.
That doesn’t mean you can’t invest in the company option though, you’ll just want to check with HR before you make investments on your own.
Get a Broker
If you have serious cash (we’re talking thousands) then you should see a broker. Look at market news, and find someone that can help you. Most people have the title of “wealth manager” or “financial advisor” now, instead of plain “investment broker”.
This one on one guidance will help you determine not only the kind of companies you want to invest in, but what kind of investments you’re comfortable with. There’s a risk in any and all types of investing.
You can take big risks or small risks – that’s up to you. Most people land somewhere in the middle when it comes to risk level.
Making Your Portfolio Work for You
Even if all you can invest is $5 every week, it’s better than nothing. Money grows over time when it’s invested, much faster than in a savings account.
Granted there’s no guarantee that you’ll be the next Wolf of Wallstreet, but it’s good to spread your money out (diversify your assets).
If you still have more questions about how much money should I invest, then talk one on one with someone in your area.
If you’re still thinking about it and not ready to start, you can read up on what companies are doing in the tech space on our site.