“The biggest mistake I see is people thinking they have to build up a ton of money to start investing,” says Keller. “That’s backward—invest now to build your money.” How you invest could depend on how much dough you have on hand. Many mutual funds have a $1,000 minimum, while the cost of buying company stock is all over the map: Apple trades for about $160 at press time, while a stock at a tech start-up might cost $10. Here’s how to spread your money and risk around, no matter how much you have.
Invest $5 to $50
Check out new investment apps, like Acorns, Stash, and Betterment. After taking a short risk-assessment quiz, you’re steered toward a group of ETFs, and you can buy a share for just $5, sometimes less. Depending on the platform, you can kick in more money whenever you like, set up automatic contributions, or, with Acorns, link the app to your debit card so that everyday transactions are rounded to the nearest dollar and the spare change gets invested. Betterment charges an annual fee equal to 0.25 percent of your portfolio, while Acorns and Stash charge $1 per month for accounts with less than $5,000.
Stick to the apps above or consider Wealthfront, a robo-adviser that has a $500 minimum but manages portfolios up to $10,000 gratis. If you’d rather go the DIY route, $500 is also enough to get active with a discount brokerage firm, such as E-Trade or TD Ameritrade, and invest in ETFs or individual stocks. Both sites let you geek out over info (streaming market data, real-time quotes, live commentary, analyst research) and offer more than 100 commission-free ETFs. Just keep an eye on possible withdrawal fees and trade commissions, which can eclipse the interest earned on a small, short-term investment.
You’ve cleared the hurdles for pretty much any type of investment and can head to a bank, mutual fund company, or brokerage. Diversification may take on new meaning, too, as you spread your money across different types of accounts—say, a Roth IRA plus mutual fund plus stocks or bonds or both. Whether $5,000 feels like big bucks or pocket change, it’s almost universally beneficial to seek out a financial adviser, says Maurer. A few hours with a fee-only fiduciary, like Garrett Planning Network or XY Planning Network, can help align your $5,000 with your goals. You’ll pay fees for advice rather than commissions on your investments.
A general financial planner is fantastic for helping you prioritize money goals and stretch savings, but with a budget this big, you may want to seek the advice of someone who also specializes in investments, suggests Keller. At $50,000, you meet many of the minimum thresholds set by brokerage firms for this type of service, such as Fidelity’s Portfolio Advisory Service. You’ll be paired with a team that is constantly checking stock portfolios and that will rebalance your investments when they’re out of whack with your risk tolerance. Fees were less than 1 percent last year (so if you’ve earned 7 percent to grow your investment to $53,500 after a year, you’d be charged $535). You can find help for less, thanks to hybrid models. For one, Vanguard Personal Advisor Services charges just 0.3 percent of your balance, because you’re paired with a team rather than a sole adviser, and computer algorithms handle some of the work. Check in biannually to see how your money is faring. “If you’re checking too often,” says Keller, “it will drive you bonkers and raise your stress.”