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How to Start Investing with $1,000 or Less

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One concern for new investors is knowing where to put when you don’t have much to invest. When I started investing, there weren’t a ton of places where I could get a diversified portfolio with only $500.The good news is that there are low cost options today.

Diversified Index Funds

One of them is investing in index funds or ETFs. With this type of investing, you are simply trying to track whatever benchmark you’ve chosen, like the S&P 500.

Either all or a representative sample of a specific index are purchased. Since most of these are automated you typically pay lower fees.

They also have the advantage of giving you a diversified portfolio with one investment, depending on the index you want to track.

For those who want to do it themselves, here are a few funds that are fairly diversified and have a low minimum requirement to open an IRA:

  • T. Rowe Price Equity Index 500 Fund (PREIX) – $1,000 minimum
  • Schwab Total Stock Market Index Fund (SWTSX) – $100 minimum
  • Schwab S&P 500 Index Fund (SWPPX) – $100 minimum

This certainly isn’t a comprehensive list, but it’s enough to get your started with investing.

Make Your (Retirement) Life Easier with Automatic Contributions

Once you’ve opened up your account and invested in your fund or ETF, you’ll most likely prefer to go ahead and set up automatic contributions.

It’s the easiest way to keep growing your portfolio and as your financial situation improves, you can increase your contributions.

What if you want something a bit more customizable, but still fairly easy to manage? You may want to look at using a robo-advisor such as Betterment. We use them for my husband’s Roth IRA. It’s extremely easy to set -up (took less than 20 minutes for us) and automate contributions so you can reach your financial goals.

We’re really happy with them and recommend Betterment for anyone who needs a a place to build their investments. Want More Info? Read How to Set Up Your IRA in 20 Minutes or Sign Up and Open an Account. For those who want more control over their portfolio, Vanguard is one of the best.

Thoughts on Investing

If you’re handling your own investments, I’d love to hear your thoughts on the topic. How did you determine your asset allocation? What resources do you recommend on learning more?

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