Investing: A word critical for our financial wellness, but often ignored for the better half of our professional lives.
While some may consider that definition of investing irrelevant or even harsh, but that’s precisely what a large percentage of Americans are doing. A recent survey indicates that at least 55% of Americans bypass investing because they consider their earnings insufficient to invest. Financial experts beg to differ. One of the key reasons behind this belief is a lack of financial awareness and education. Our team decided to list investment hacks that start as low as $10 a week. Let’s get started!
Roughly half of the adults (46%) do not participate in their workplace retirement plan. While it may seem okay to let go of the 3% matching contributions from the employer, it could have a significant impact on your savings in the long-term. If you’re the average American, you probably already have enough financial commitments eating away your salary, but that doesn’t mean you leave free money on the table. Start with 1% contributions and grow it over the years. These savings will not only benefit from match-up contributions, but they would also offer tax-deductions. You can deduct these contributions from your annual taxable income. Your contributions to a retirement plan enjoy tax-deferred growth. See, it’s not that bad!
People often avoid savings in mutual funds or other financial products because of higher capital requirements. Do you want to invest in a financial product that not only protects your capital but help you beat inflation? Enter I Bonds. I Bonds start at as low as $25 for electronic bonds and $50 for paper bonds. The Treasury Department revises interest rates on I bonds semi-annually, taking into account the rate of inflation. While the interest income is taxable upon encashment, you might receive exemption when using the proceeds to fund education. The minimum ownership period of I bonds is one year, and an I bond purchased today will continue earning interest for the next 30 years. So the next time you think of ditching investing, think of I bonds.
Remember that amazing feeling you had in childhood when saving money in a cookie jar! It’s time to get back to basics and rejuvenate those childhood moments. While the funds in your cookie jar will not grow or offer any capital returns, it will ensure that you set apart a portion of your monthly income towards a goal. The ideal way is to start contributing a dollar every day, and use it to buy an I bond or transfer it to a savings account later. Simply adding $1 every day would leave you $365 richer annually!
Unlike the global domination we all witnessed in the Terminator series or Matrix movies, the current form of artificial intelligence can make the world better for you, at least financially. Robo-advisors are currently in high demand, considering the popularity of Betterment, which manages over $13.5 billion in investments. These automated digital advisors have low capital requirements. You can start investing for as little as $100 per month. Setting up an account with robo-advisors is relatively simple. Sign up with any of the advisors. Choose your investment goals and risk profile. Fund the account or choose regular monthly installments, and you’re done. The robo-advisor will manage your money in accordance with your financial goals. In addition to being easy to access, robo-advisors offer low-management fee, ranging from 0.25% to 0.9%.
Savings account attracts heat for offering low-interest rates, especially from people seeking investment options. However, what people often fail to realize is that they can deposit any money in a savings account and use it at their discretion. If you find it hard to save money for investing, start with a weekly contribution of $10 or $20 to your savings account, and once it has enough balance, use it for a more rewarding investment opportunity. If saving $10 or $20 is too much for you, setup auto deductions, ensuring that a predetermined amount is automatically deducted from your paycheck. You can even ask your employer to disburse your income in more than one savings account.
Having money in your savings account will also help you develop an emergency fund. A Bankrate survey indicates that only 40% of Americans have enough savings to pay for a $1,000 emergency bill. Putting aside money in your savings account will keep you ahead of most of the people.
Saving money to invest doesn’t have to be difficult if you’re ready to practice financial discipline. Always remember that every dollar you invest comes back with another dollar (in a couple of years) and that earned interest is doing the same repetitively.
Let us know which of these investing hacks you’re going to try!