How To Invest On A Low Income

October marks my invest-iversary, as it were. In 2018, I started seriously investing my money. Over the last two years, I’ve invested $10,000 into the market. It’s been a slow process. A lot slower than a lot of people in the financial independence community. But I’m so proud of myself and my accomplishments, and I want to help you get there, too.

Don’t get me wrong, it was daunting at first. Money management is coded as masculine in our culture, and while women are fully capable of rocking money (check out Tori Dunlap and A Purple Life if you want to see women KILLING it), I know I had some anxiety tackling something that I didn’t feel I could do. And the gender gap made me feel worse about it. I didn’t want to be seen as dumb or ask stupid questions. So I broke it down into smaller steps. And now I’m an investing pro.

How I Gained Confidence and Invested $10,000 over 2 Years

It’s okay to not know where to start or to feel like investing is too challenging. We’ve all been there. Just like everything, investing is a skill that you have to learn. And it’s okay to not have it yet. In fact, there are ways to help with that fear and keep you on the path to becoming a super successful investor. We can do this together.

Start Small to Build Confidence to Invest

I started small – with Roboinvestors. While I don’t tend to recommend them as long term investment strategies, apps like Acorns are great to get your feet wet. The principle is simple. They connect to your debit card, and any time you spend money, they round the purchase to the nearest dollar and put that money into an investing account. You don’t get a lot of choices of what to invest in, and the fees are a bit high, but it’s a great tool to start rocking your confidence. And that’s the first step to being a great investor. After I invested about $1,000 this way. I decided that I wanted to do something a bit more serious.

Take Advantage of Retirement Plans

I was lucky enough to work at a company that offered a 401(k). They unfortunately didn’t offer a match, so I didn’t get “free” money, but I set up my 401(k) with my company and started with five percent of my monthly salary. I had a goal to increase by a percent every month until I hit 15 percent.

I also didn’t worry about what funds I put it into. A target date fund allocated my assets for me. And while the fees might be higher for these kinds, it’s a great way to start off. I was able to avoid decision fatigue by letting the investment company choose what stocks to invest for me.

These are great strategies to increase confidence. I quickly hit my 15 percent of my pay in investments once I realized how little my paycheck changed with that first five percent. However, I kept it in the target date fund because picking individual funds was daunting. It’s okay to not do everything at once. It’s also okay to ask for help.

If you don’t have access to a 401(k), you can open an IRA with Fidelity and start investing for retirement that way.

Use Strategic Investing to Plan for Mid Range Goals

When I decided I wanted to buy a house, I knew I needed to start saving. But putting money into a high yield savings account for ten years wasn’t going to make my money work for me, so I decided to look into yet another robo investor to help me reach my goals. I decided this time around to work with Ellevest, a women owned and run company that helps women invest in women. I love their mission and platform. They also have an amazing user interface.

I started with $50 a month. It’s not a lot of money, but it definitely helped me get the inertia going. Since then, I’ve changed my contributions a lot. At times when I could afford more, I invested $150 a month. And when I couldn’t afford as much, I dropped my investments down to $25. But I’ve never skipped a month.

Finding a way to invest that works for you and allows you to consistently put money into the market is going to be your best strategy. The goal is to keep money in the market as long as possible. If you invest too much one month, and overdraw your account, that’s going to be detrimental to your overall financial health. So make sure you’re checking in with your money to make sure you’re not over investing, because believe me, it’s tempting.

Check With Your Company for Unique Investment Opportunities

Right now, I’m a partner at Starbucks. We have the opportunity to buy stocks of the company at a reduced rate. We can use up to 10 percent of our paycheck to buy stocks at a 10 percent discount.

It’s not a large amount of money, but every three months, I get almost $500 in stock. You can cash it out immediately, but I’ve chosen to keep it in the market. It’s another way to diversify my assets. That’s just a fancy way to say it’s a way to invest in a bunch of different things.

Not every company offers this perk, but if they do, definitely take advantage of it! However, make sure that this isn’t your only investment. You don’t want to put your eggs in one basket.

Diversification Makes a Strong Portfolio

It’s very important that you have a bunch of different investments. That way when one part of the market is struggling, your money isn’t completely wiped out. That’s why I personally don’t recommend picking individual stocks – with the caveat of using employee stock purchase plans as a way to get discounted stock.

Right now, I have my old 401(k) from when I first started working, my investments with Ellevest, my current 401(k) with Starbucks, and my Starbucks stocks. Your portfolio will look different, but the point is to start investing and then slowly build onto it.

I didn’t start out with all of this. I built it over a period of two years. And you can too. The goal is to invest in a way that makes you feel confident, because when you feel good about your money, you’ll want to build on the good habits you’ve created to feel even better.

But I want to know, what’s the most daunting part of investing for you?

Posted in Money

Moriah Joy

Moriah Chace founded this site in 2018 to narrate the money journey she and her husband were on. After their divorce, she pivoted and is now tackling living well on a low income budget. She is currently the editor at Poorer than You. And she has words in Live Better, Deal Taker, and EcoFrugals. As part time barista and a full time coffee addict, she currently attends UTA for a master's in Civil Engineering and wants to change the world one high speed train at a time.

How To Invest On A Low Income

How I Gained Confidence and Invested $10,000 over 2 Years

Start Small to Build Confidence to Invest

Take Advantage of Retirement Plans

Use Strategic Investing to Plan for Mid Range Goals

Check With Your Company for Unique Investment Opportunities

Diversification Makes a Strong Portfolio

Moriah Joy

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