The following blog was originally published in Federal Navigators’ Blog.

Investing can be difficult for anyone. There are so many types of investments to choose from, all with different conditions, minimums, goals, purposes, commitments, riders, and more. So even if you’re just an average Joe looking to put some savings into the market, you have a lot of decisions to make and details to consider first. To make matters even more difficult, what if you don’t have a lot of money to invest?

Investing when you don’t have a lot of money requires precision and attention to detail. You have to be confident in the move you’re making, since it’s likely that you don’t have a second stash of money lying around in case your first attempt doesn’t pay off. So here are some tips for investors who don’t have a lot of money.

  1. Look at the minimums. A high minimum can mean several things. It may be more risky, it may be meant for long-term use, or it may be due to something else entirely. If you’re low on money, you should probably look for lower minimums so you can diversify your investments instead of limiting yourself with higher costs.
  2. Know how long you have to leave the money there. Consider your personal situation. Can you can live without this money for an extended period of time? If you can, there are certain investments that are made for long-term planning. If you can’t, look for something you can pull out of sooner without running into major surrender fees.
  3. Look at the risks. If you don’t have a lot of money, you may not want to put your money into a particularly high-risk investment. You may favor a more reliable, conservative option instead. Of course, it all depends on your individual situation and needs.
  4. Invest somewhere that offers a match. Some investments match all or part of the amount you contribute. This can have great advantages, especially if you’re strapped for cash.
  5. Check for hidden fees. Getting hit with a lot of initial investment fees can set you back pretty far, especially if you don’t have a lot of money to invest in the first place. Make sure you’re aware of and prepared for any fees you’ll have to pay when you invest so you won’t be caught off guard.
  6. Keep an emergency fund. Don’t invest everything you have at once. It may be tempting to put all of your savings into the market, especially when you’re trying to create a diverse portfolio without a lot of money to work with. But you should aim to have an emergency fund you can access at any time that will cover at least six months of expenses. For tips on saving more by cutting down on unnecessary spending, check out our article, Living Below Your Means – Things to Give Up that You May Never Even Miss.

Life can be hard when you don’t have a lot of extra money, and investing is always a little tricky. Add those two together and you can end up in a pretty stressful situation. It takes research and patience, as well as attention to detail. The key is to find investments that you can rely on, that will be the most beneficial to your unique situation.

 

About the author: Federal Navigators, located in Gaithersburg Maryland, was founded in 2012 by Ryan Dunn and the partners of Medallion Financial Group. John Stohlman, Dan Searles, and Laura Stohlman been in business for over 25 years each, are all certified financial planners,and collectively manage well over $300 million in assets. We aim to empower Federal Employees with the education, direction, and advice they need to make wise decisions about their benefits and retirement. Visit our website, federalnavigators.com for more information and check out our blog, federalnavigators.com/blog/ for weekly posts.

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