I dont have a lot of money, I live paycheck to paycheck but want to invest, whats the best way to do it?
I want to start accumulating some money by investing. Any suggestions would be great. What is the best way to get started?
Answers
426 points
MONEYTREE answered 4 months ago …
Well Scottrade is one of the cheapest brokers to get started with its only $500.00 dollars to open an online trading account. There are other brokers to Etrade, Fidelity,and many more, So look around before you choose one. Before you get a account you should learn about the market and how it all works by reading some books, Once you do have money in your account you should just watch the market for a couple weeks to see how it really moves in real time before you put your own cash to work. If you already dont know. And one more thing, after you do invest and you get used to everything, be patient dont be looking for alot of money fast, building your account up slow, is always the way to go even if its $30 bucks at a time especially if your straped for cash. I wish you good luck!
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2082 points
alanj answered 4 months ago …
TradeKing is cheaper then Scottrade at $4.95 per trade. And you don't have to fund the account to open it. But you will have to fund it in order to trade. Before you start trading with real money, I would open a virtual account also to try out your trading skills. And while you are practicing on the virtual account you can be funding the real account a little at a time. When you are ready to trade for real your real account will be funded and ready for you to trade.
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Rhett51 answered 4 months ago …
You say you live paycheck to paycheck. This scenario suggests that what you need to do is open a savings account at your local Credit Union. When you have built up an emergency fund, then you can consider investing in equities.
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Sensei answered 4 months ago …
Here's what you said ...
"I don't have a lot of money". That means you have no financial reserves to fall back on in the event of an emergency. It also means that "every penny counts".
"I live paycheck to paycheck". That means that you can't save much - if at all. Moreover, since you don't have a lot of money in the first place, the little that you might be able to save cannot be exposed to risk of any kind.
Unfortunately, this means one thing - "investing" is not in the cards for you unless and until your circumstances change. Investing implies risk and you should NEVER risk money you cannot afford to lose. Your parameters determine that the amount you can afford to lose is ... zero!
For now, my advice is to eliminate any debt you may have and put anything you can save into an interest bearing savings account where it will be safe. As they say, "Better safe than sorry." Remember, in the '60's, GM was #1 on Fortune's 500. You know where it is now. There are no guarantees in "investing", and your situation is one in which you cannot afford to take even a small loss.
3963 points
MNSL answered 4 months ago …
In addition to above good answers I like to write following.
I think you should learn risk and return on investment first.
Then you have to learn how to invest in all types of market conditions.
In short unless you improve your knowledge and get experience I do not think you can beat the market.
With four decades of experience still some top investors can not beat the market all the time.
Yes you can accumulate money if you invest wisely and systematically. For example if you have bought Sanderson Chickens farms (SAFM) when it was trading around $20(6 months before) you capital would have been more than 100% by now.
Even you should have followed General Mills. People will postpone everything. But they will eat.
Who thought global chicken and egg stocks will outperform the market. Only intelligent investors are buying accumulating poultry stocks globally now. Some of these stocks will appreciate further during next 12 months.
In addition you should read some question and answers given by some of our best ticker hound members.
All the best for you. Do not follow the crowd
197 points
whiteshadow204 answered 4 months ago …
As a recent college grad, I can relate to your situation, but can attest that my situation is rapidly changing. I started my investing education some time before I graduated, and have started saving since I began work.
This time in our lives when we have no money to risk is a great time to learn about investing. I suggest opening up practice/virtual accounts. Try different brokers, some may be more beginner friendly than others, and as you go you'll likely discover the various pros and cons and find a good one to invest your real money with when it's time. As much as you can, treat the account like real money. I admit, that's difficult to do when they are usually $100,000 accounts. I don't expect I'll have that much money to invest any time soon.
The other important step you need to take is to start accumulating money by saving. This will take time, which is great, because it also takes time to learn about investing and to practice what you learn. I personally use an ING direct account. I have it automatically set up to withdraw my savings from my credit union chequing account every paycheque. Once it accumulates into something significant, I'll move it into something slightly more aggressive, and then eventually into an investment account. This is just one good way to do it, but the point is that you need to have your debts paid off and a few months worth of expenses put away in the event of some sort of emergency.
Also, you mention accumulating money. Another decision I made for myself was to purchase a house as soon as I was able. This is a fairly common way that most people accumulate wealth opposed to renting. Firstly, my mortgage payment is much less than any rent I've ever paid. Secondly, I can view those payments as money into a savings account - assuming that the house will sell for at least what I paid for it when I decide to move. When I was renting, the monthly rent cheque was just money spent.
Good luck - be patient - and don't risk money you can't afford to lose.
192 points
seyobnats answered 4 months ago …
All the above answers are very informative but the key words in your question are:"I live paycheck to paycheck." You probably won't like my advice but, first pay off your credit cards starting with the ones with the highest interest rates, If you are like most people in your situation you have thousands dollars of debt outstanding and you hope that by investing in some "magic" stock you will make a killing anfd pay of everything with your successful investment. Well pal, it doesn't usually happen that way!
These days, the highest cards are charging over 24 percent interest on the unpaid balances even without any late fees, There are almost NO investments that you could make than to gain 24 percent on every dollar you pay off on yur credit cards. When you have zero balances on your cards, then you can think about investing while you build up your rese4rves. Until you have at least 6 months reserve salary, and NO credit card debt you can begin investing as the above freinds have told you to do. Good Luck! Buy one of Suzy Orman's books where you will read much more about this.
