Not great at saving?
Don’t worry, we’ve all been there.
As a reformed non-saver myself, I know what a struggle it is to change, so before we talk about how to start investing with basically no money, let’s talk a bit about practical and creative ways to save your first $100.
Take The First Step
Just like any challenge, the biggest hurdle is just taking that first step, so if you haven’t yet saved your first $100 take a dollar bill out of your pocket right now. Bonus points for a $5 or $10 bill!
Trust me, just do it!
Now, walk into your kitchen and grab a mason jar, or glass, or tupperware container that you can see through and put the dollar bill in it. Any container will work as long as it’s see-through.
Now, place the jar/container/glass somewhere prominent, possibly where you put your wallet or purse at the end of the day. Any money that goes in your savings jar DOES NOT COME OUT.
Congratulations, you just saved money!
Now I understand that saving cash is not only inconvenient, it can be very inefficient. You don’t earn interest and your money is just sitting there in front of you, tempting you to spend it. Not to mention, who really carries cash anymore?
To make this whole “saving” thing easier, let’s explore a few ways unconventional ways to save money.
Digit is a free app that analyzes your checking account and the makes small transfers to a savings account for you. It will not drop your account below a set level, and allows you to withdraw you Digit balance at any time by transferring the money electronically. Digi’ts algorithm and savings transfers are designed to make you “not miss the money” – and since joining Digit I can honestly say that I haven’t missed any of the $915.77 that Digit has saved for me.
If Digit or the cash savings plan isn’t for you, then your next best option is to set up automatic savings transfer to your savings account. Start with just $10 scheduled to transfer to your savings account each day you receive a paycheck. As you become more comfortable with that savings level, up your savings to $20, $50 or even more!
In just a few weeks, you will have saved your first $100 and will be able to start investing!
When deciding where to invest your first $100, there are a few things to consider. I’ve chosen brokerages that already meet these criteria, but if you’re truly ready to start investing, then you should be aware of them as well.
- Minimum Investment: First and foremost, the most important aspect of investing is the minimum investment. Since we’re investing with very little money, each and every one of these companies has a minimum investment of $100 or less.
- Fees: When you’re investing with very little money, fees are especially important since there is nothing as disheartening as investing your money only to see your gains be eaten up by expensive brokerage fees. Each and every one of these companies have some of the lowest fees in the business.
- Ease of Use: For the beginning investor, complicated investing strategies are not necessary. The easier it is to invest, the higher the company will rank on this list.
- Reputation: No slimy investments here! All of these companies have solid histories and are committed to making their products and services the best that they can be.
First on the list, Acorns, combines the concept behind Digit with traditional investments. Acorns is an app that rounds up your purchases and then invests the difference. It’s extremely easy to use and you will be surprised how fast the savings add up! There are absolutely no minimums to open an account with Acorns, and no commissions. Investments are made into Acorns’ Portfolio, with returns that vary based on the market. Dividends are automatically reinvested, which makes saving AND investing easy. Finally, there are no fees or penalties to withdraw funds from Acorns, and this can be done with just a swipe on the screen of your smartphone.
If the automatic transfer method behind Digit and Acorns is not for you, then Betterment is the next recommendation. It is the perfect platform if you are new to investing because there is no minimum deposit to open and account, and you can contribute as little as $10 at a time. Additionally, when you open an account, the site sets you up with an investment portfolio that includes is based on a few questions you answer, and then tailored to your preferences and risk tolerance.
Betterment actually performs the investment management, so you don’t have to, and if you’re able to set up an automatic deposit of at least $100 a month, Betterment fee is just 0.35% of the amount of money you have in your account. This fee is incredibly low considering that it includes a professional management fee. If you cannot invest $100 a month, then Betterment’s fee is just $3.00 a month.
Betterment also offers a feature called SmartDeposit, which helps you invest your excess cash, but this is feature is automatically turned “off” when you open it account, and can be turned on at your discretion.
Motif Investing was started and based up on the concept of giving investors control over their investments by offering theme-based investments, called Motifs. Each motif is made up of 30 stocks or bonds, and you can invest in pre-made motifs or create your own, which gives you a chance to dip your feet into investing without jumping in the deep end.
This hybrid approach gets you the easy to understand fee structure of $9.95 per motif invested in. If you choose to change a stock in your own Motif, you can do so for a flat fee of $4.95 for one trade, or $9.95 for unlimited trades.
Recently Motif Investing also launched Horizon motifs, which are no-fee motifs made up for low cost investments that are considered the best in their class for their asset classes. They are completely customizable and are based on your goals, such as risk tolerance, and time frame. The minimum account balance is $250, but if you sign up through my link you can get up to $150 cash back.
eTrade is one of the most well-known brokerages out there and for good reason: their talking baby commercials.
But beyond the fun image, eTrade is an affordable, flexible brokerage firm that is perfect if you’re ready to move past the most basic ways to invest and dip your feet into actually which stocks and bonds your money actually purchases.
eTrade does charge a $9.99 commission per stock trade, but don’t let that deter you because they offer many tools and service that make that price worth it, namely fantastic customer service, a crazy number of mutual funds to choose from, and even allows you to invest in foreign markets if that’s your thing.
The minimum balance to open an eTrade retirement account is $0, or $500 for a standard account, plus you could get up to $600 cash back when you start investing with eTrade.
However you like to save and then start investing, there is a way for you. All you have to do is take that first step. Once you do, saving and investing will not only get easier, it will become more fun! Plus, your future self will owe you a big thank you!
*This post may contain affiliate links. See my disclosures for more information