No matter how much (or little) you make, saving for retirement is incredibly important. Social Security only covers a portion of your income, so you can’t live on this entirely. We hate to be the bearers of bad news, but if you have no money saved up, you may not be able to retire at all.
Fortunately, there are ways to save for the future without hurting yourself today. Below are some of the suggestions we recommend to our clients who want to invest on a small paycheck.
Try the Cookie Jar Approach
There is absolutely nothing wrong with the cookie jar approach. In fact, it’s a great strategy for those who haven’t been very good at saving. Start with just $10 a week if you have to. It might not seem like a lot, but it ends up being over $500 at the end of the year. You can do this with physical jars or an online savings account.
Start an Automatic Investment Plan
An automatic investment plan (AIP) automatically invests money for you. This is a hands-off way to start building a nest egg, and it comes out of your paycheck so you’ll still “get paid first.” You don’t need any investing experience, either. You can usually get started with an AIP with just $500.
Invest in the Stock Market
Believe it or not, you can get started with as little as $1 - or at least very little upfront money. This gives you the opportunity to warm up to the stock market and familiarize yourself with the best investments. A financial planner in NJ can help keep you on track and prevent you from making emotional decisions.
Enroll in Your Employer’s Retirement Plan
An employer sponsored retirement plan is another great way to grow your money. You can make small payments that you won’t even notice are missing from your paycheck! And, you can gradually increase your payments as you grow more financially stable. For example, some people start out with a 1 percent contribution, then 2 percent and so on.
Try Low Initial Investment Mutual Funds
Mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds in a single transaction. The only problem with this approach is that most mutual fund companies require a minimum investment of $500 to $5,000. If you’re on a tight budget, that $500 might be hard to swing.
As you can tell, there are many ways to invest your money without having to sacrifice today. To determine what your best options are, contact Leonard Financial Solutions. You have to start somewhere, and once you do, your future self will thank you!