Scared to Invest? How to Start With $5
Do you invest?
If you’re a young person, chances are, probably not.
Only 37% of Americans under the age of 35 are investing in the stock market, according to a 2018 Gallup poll. That means nearly two-thirds of us are not.
Why? Gallup hypothesizes it’s because we grew up during the 2008 crash. We saw people around us lose it all — and now we’re hesitant to take that same risk. Instead, we’re turning to safer investments, like savings accounts and CDs.
Yes, these are less risky options and will help grow your money over time; however, they won’t reap the same financial benefits as stocks.
If you’re not yet investing and are looking to gently wade in, we’ve rounded up a few options to help you overcome your fears.
1. Invest in Real Estate (With Just $500)
Want to try real-estate investing without buying a home or playing landlord? We found a company that helps you do just that.
Oh, and you don’t have to have hundreds of thousands of dollars, either. You can get started with a minimum investment of just $500. A company called Fundrise does all the heavy lifting for you.
Through the Fundrise Starter Portfolio, your money will be split into two portfolios that support private real estate around the United States.
This isn’t an obscure investment, though. You can see exactly which properties are included in your portfolios — like a set of townhomes in Snoqualmie, Washington, or an apartment building in Charlotte, North Carolina.
You can earn money through quarterly dividend payments and potential appreciation in the value of your shares, just like a stock. Cash flow typically comes from interest payments and property income (e.g. rent).
(But remember: Investments come with risk. While Fundrise has paid distributions every quarter since 2014, dividend and principal payments are never guaranteed.)
You’ll pay a 0.85% annual asset management fee and a 0.15% annual investment advisory fee.
2. Get a Free $5 to Invest in Stocks
Before fully committing to buying stocks, you can own portions of them with exchange-traded funds (ETFs). Basically, you’re buying a piece of a company’s stock — rather than the whole shebang. This makes investing more affordable and tends to be slightly less risky, since you’re not putting all your eggs (money) in one basket (a stock).
Not sure where to get your hands on ETFs? Consider starting an investment account through Acorns.
Start with $5, then stack up change over time with its “round-up” feature. That means if you spend $10.23 at the grocery store, 77 cents gets dropped into your Acorns account.
Then, the app does the whole investing thing for you.
The idea is that you won’t miss the digital pocket change, and the automatic investments stack up faster than you’d think. For example, Penny Hoarder Dana Sitar was able to invest at a rate of $420 a year. That means you could set aside $1,000 in about two and a half years — without trying.
The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.
So you see? Investing isn’t that scary. Start with baby steps, then you’ll be rolling around in stocks in no time!
Carson Kohler ([email protected]) is a staff writer at Codetic. She, too, was nervous to invest until she started exploring ETFs.