There are those who do well investing with large amounts of money when they see what they think will be a good deal. However, for most of us, that isn’t the best approach. Most of us have smaller amounts of money to start, and we can’t afford to lose out on an investment that requires a great deal of capital.
For most “regular” folks, the key to successful long term investing is consistency. This is the way to build wealth over time through investments, and it’s relatively easy to start.
Set an Investment Schedule
One of the easiest ways to get started with investing is to participate in your employer’s retirement plan. If your employer offers a plan, fill out the necessary paperwork to have a portion of your paycheck deducted and deposited into the retirement account. Many people don’t think of their retirement account contributions as investments, but they are. This is one of the easiest ways to begin investing, since the money is taken from your paycheck, and you don’t have the chance to spend it before it’s invested.
Even if you don’t have access to a retirement plan through your employer, you can invest consistently. Set up an automatic withdrawal from your bank account to an IRA. You can also use an investment plan to regularly add money to a taxable investment account. Plenty of online brokers offer you the option to set up an automatic investment plan.
Setting an investment schedule, and automating it if you can, is a great way to ensure that you are consistent in your contributions. This is important, since regular investing will put the power of compound interest to work on your behalf. If you want to build wealth over time, an investment schedule is a good idea.
Start Small and Grow Your Contributions Over Time
Even if you think that you don’t have enough to make a difference, it’s a good idea to start investing. Consistency allows you to put dollar cost averaging to work for you. With dollar cost averaging, you buy as many shares as your regular contribution will allow, even if it’s only a single share. Over time, the number of shares you have adds up, providing you with a valuable portfolio.
You don’t need to have a lot to start. The important thing is to start — and to be consistent. Over time, as you pay down debt, or get raises and promotions at work, or start a side gig, you can increase the amount you are setting aside for your investments. You can increase the amount you invest by changing your withholding from your paycheck, or by opening new accounts and investing.
The important thing is to start as early as you can, and choose an amount of money that you can invest consistently, each month. Then you need to make sure that you invest a portion of any increase that you get in your income, or any reduction you have in obligations. Regularly invest, and you might be surprised at how your wealth grows over time.