Last month, my accounts were in penury and it was just the 16th of the month! I found it hard to believe especially because I am a savings and investment advocate and with all my qualifications and certifications, I seem to have found myself in the same dilemma I try to save people from. What is the lesson here?
It isn’t enough to know or be enthusiastic about savings and or investments, you need to build the culture of saving as well. What do I mean? Knowledge is not enough, you have to practice and be intentional about it.
People talk about principles and discipline when they talk about savings and investment and as much as I agree with them, being intentional about making sure you stay in money involves actually setting a reminder or giving a standing order to your bank to set aside that money aside today.
There are several ways to start investing with little money, especially with online based platforms making it easier than ever. All you have to do is start somewhere. Once you do, it will get easier as time goes on, and your future self will love you for it
Some Tips on Savings and Investment
- Try the cookie jar approach
Saving money and investing it are closely connected. In order to invest money, you first have to save some up. That will take a lot less time than you think, and you can do it in very small steps. If you’ve never been a saver, you can start by putting away just N 1,000 per week (N200 every working day). That may not seem like a lot, but over the course of a year it comes to over N52,000
Try putting that N1,000 into an envelope/ shoe case or even that legendary bank of first resort, the cookie jar. Though this may sound silly, it’s often a necessary first step. Get yourself into the habit of living on a little bit less than you earn, and stash the savings away in a safe place. The electronic equivalent of the cookie jar is the online savings account.
- Let a robo advisor invest your money for you
Robo advisors were created to make investing as simple and accessible as possible. No prior investment experience is required and set-up is easy. Let their automated intelligence track your investments in the background, and pay lower fees in the process. One great robo advisor that I recommend to first-time investors is InfoWARE Finance robo advisory. See some more investment tips and how to start here.
- Enroll in your employer’s retirement plan
If you’re on a tight budget, even the simple step of enrolling in your employer retirement plan may seem beyond your reach. But there is a way that you can begin investing in an employer-sponsored retirement plan with amounts that are so small you won’t even notice them. For example, plan to invest just 1 percent of your salary into the employer plan- such as pension, insurance, assurance etc.
You probably won’t even miss a contribution that small, but what makes it even easier is that the tax deduction that you’ll get for doing so will make the contribution even smaller.
- Put your money in low-initial-investment mutual funds
Mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds with a single transaction, making them perfect for new investors. The trouble is many mutual fund companies require initial minimum investments depending on the fund. If you’re a first-time investor with little money to invest, those minimums can be out of reach. But some mutual fund companies will waive the account minimums if you agree to automatic monthly investments.
- Play it safe with Treasury securities
Not many small investors begin their investment journey with treasury securities, but you can. You’ll never get rich with these securities, but it is an excellent place to park your money—and earn some interest—until you are ready to go into higher risk/higher return investments. Treasury securities, also known as savings bonds, are easy to buy through the federal government bonds or any banking institution that trade T-bills.
About The Writer
Benedicta Omoruyi is a professional security and investment officer (CIS), marketer and technical evangelist for InfoWARE Limited. She is a fierce writer, content creator, investment enthusiast and advocate, and an all round creative female. She writes weekly for Glazia on the column, Money Talk.