Hey friends can you find $50 dollars from your budget to help you in a big way? Well if the answer is yes then you should continue reading as I will give a few ideas on how to invest that money every three months for your benefit. Before we proceed I have to set some guidelines for all the readers of this blog. What are the guidelines you may be thinking right now? This advice is for people who 1. Do not have any non-mortgage debt, 2. Already have an emergency fund totaling at least 4 months of living expenses, 3. You will maintain a long term investing strategy with the investing dollars. If you qualify after reading these 3 guidelines then you can proceed reading, if not this post is not for you. Completing the two goals above and thinking with a long term mentality will benefit you more than investing right now.
The fifty dollars a month is just a random number I decided to write about, but if you can spare more then by all means invest more. While it might not seem like much $50 dollars invested every month for a year will become about $600 dollars. In addition your account will get a boost every time your investment earns interest or dividends. If you really sit down and crunch some numbers the average annual salary in the United States is about 40-50 thousand dollars. Now if you take the $50 dollars as a percentage of $45 thousand in income, do you know that it is only about 1% of the income? If you come to me with an excuse that you cannot find 1% to invest from your budget then you are in denial. Even people with debt can spare fifty dollars a month, but for this example those people should place all extra income to pay off debt.
Can you Spare fifty Dollars a Month:
Send $50 to online savings bank for current goals (Future Car, Wedding, Renovations)
Send $50 to Vanguard Money Market Account for future investments (Roth IRA)
Send $50 to a Dividend Reinvestment Account
Send $50 dollars to an online Broker to build taxable alternative to fund early retirement
Send $50 dollars to a Direct Stock purchase plan
Send $50 to a Peer to Peer lending (Risky)
Send $50 to Credit union to fund Home Down payment account
Send $50 to fund an educational fund for your kids in your name (This will allow them to qualify for financial aid)
These are the basic ways you can invest slowly and in an efficient manner. One caveat you must be made aware of is that if you are being charged a fee to place the money into any of the above investment accounts you may want to let the $50 build up for a at least 3 months then you can invest the entire $150 for one fee, instead of 50 dollars and 3 fees. Be smarter than the system and you will succeed. Just imagine if you invested in all of these accounts with $400 dollars, do you know how much wealth you can build month after month. After one year you will have invested about $4800 dollars and it is still only about 10-12% when compared to the average annual income of 45K.
Always keep in mind the fees associated with the investing options above. If doing all of these options amount to $100 dollars in fees a month, then it may be beneficial for you to concentrate on doing only 2-3 of the options above every quarter with larger dollar amounts. This will reduce your fees by more than 1/3 of the cost. By separating the trading per quarter you will allow yourself sometime to build up the savings while saving the fees.
Comment if you can spare fifty dollars a month for building wealth?
Rich Uncle EL
I do my best to send some money to a savings account i rarely if ever actually see.
I do this with a bi-weekly auto-draft that deposits directly to my Capital 360 (formerly iNG) account.
It's nice to log into that account every other month and see the amount growing and it's painless.
The Warrior
NetWorthWarrior.com
I agree I remember the good old days when my ING account was at 2-3% interest. It was growing faster back then. Keep growing that Net Worth Warrior.
Great post EL. I appreciated your caveat at the beginning, because personal finance, by it’s very nature, can’t be “one size fits all.” I have a Sharebuilder account, and will let my minor contributions add up before making a transaction, in order to reduce the percentage I pay in fees. And yeah, I totally remember when I was getting about 4% on my FNBO savings account… those were the days. Mr. Roboto
Thanks for the comment, I am always mindful of fees in retirement accounts and brokerage accounts. They will be a big factor in the total investment returns. Talk to you soon.