Why 5%? Assuming you get an average return of 7% on your investments, that means your net return will remain at least 2%, even if you continue to pay off your debt. Over 220,000 incredible students are learning how to master their classes, do more things and get the jobs they want, and so should you. The other advantage of a microsavings account over other forms of investment is liquidity. You can generally withdraw money from a microsavings account balance up to five, 10, or even unlimited times a month, so it's a good place to store an emergency fund.
While microsavings accounts are essentially liquid and risk-free, the main drawback is that they don't make much money. According to the FDIC, the national average interest rate for a savings account is a concise APY of 0.06% and, while it's easy to find a microsavings account that offers 0.50%, it's still well below the inflation rate. One of the best ways for beginners to invest in stocks is through mutual funds within an employee-sponsored 401 (k) plan. There are many ways to start investing with little money, including using online and application-based platforms that make investing easier than ever.
Fortunately, there's an easy way to invest in large collections of stocks and bonds without having to buy them individually. That said, if you're already contributing a healthy amount to a retirement investment account, such as a 401 (k) or an IRA, but want to dive into individual stock trading, buying fractional shares may be a good starting point. If you have money to spare and want to invest outside of traditional retirement accounts, there are a number of investment apps for beginners that suit new investors. Robo-advisors ask a few simple questions to determine their goal and risk tolerance, and then invest their money in a highly diversified, low-cost portfolio of stocks and bonds.
You may find that investing your money with automated advisors works better, or you might lean toward investing in real estate. So what exactly is investing? That's a huge question, but in its most basic form, investing means buying something whose value is expected to increase. You must start investing your money with what you already have before you can make larger investments. You may think that investing is too risky, but it's even riskier not to invest some money for your benefit in the future.
This made it prohibitive to invest even in a single stock with less than hundreds or thousands of dollars. Getting enough money to invest and pay investment fees and commissions has baffled many potential investors. It's best that you simply invest your money in ETFs and don't get hung up on the “best possible investment strategy”. Robinhood is a good example, since it doesn't require a minimum investment either to open an account or to invest in fractional shares, called shares.
Thanks to living in the 21st century, there are investment apps that allow you to invest in almost anything you want. You don't need any previous investment experience, as robo-advisors take all the guesswork out of investing.
