I invested my monthly Roth IRA contributions and then contributed an additional $5 so that I could buy one more share of an ETF that I own. At the time that I wrote this that ETF cost $26 per share. That’s a pretty low barrier of entry to something that I consider to be a very worthwhile investment.
When I started learning about investing I did a lot of research around questions like, “How much money do I need to invest?” I was never able to find an answer that seemed very helpful and the barriers to invest in the stock market were much higher than they are today.
Recently, I was asked by someone, “How much money do I need to have to invest to make it worthwhile?” This is an interesting question and one that I feel I can answer from past experience of having had these same thoughts myself.
I would guess that how much do I need to have to invest is probably one of the most searched personal finance questions. Here’s what I believe to be the short answer to that question: anything.
What Are You Going To Invest In?
Investing means different things to different people and there are so many different opportunities that you can invest in. How much money you really need may depend on the type of investment that you want to make but I believe that if you’ve chosen a wise investment, then investing any amount into it is worthwhile.
When it comes to investing in the financial sense, which is the angle that I believe many are taking when asking this question, you don’t need much at all to make it worthwhile. When I was researching this question when I first started learning the basics of investing, I was researching investing in stocks. I suspect that’s what the person who asked me was talking about as well.
With no account minimums, ETFs, and fractional share trading becoming more widely available, investing in a diversified basket of stocks is more accessible than ever. Look into it if that’s what you’re interested in.
Is it worthwhile? That depends on a lot of things including how you’ll behave once you make that investment and if you’ll continue to systematically invest more. If you remain disciplined, consistent, and focused on the long-term, then it can definitely be worthwhile.
Being educated on investing or having a financial planner on your side who can educate you and help you may be more worthwhile than jumping in head first and making the typical rookie mistakes. On the other hand, personal experience is a great teacher.
Examples Of Investments
Start with the basics and make sure that you have a solid foundation in place. Here’s a great list of things that you might consider investing in:
- Yourself (Knowledge, education, personal growth, classes, courses, coaches, etc.)
- Emergency Fund
- Proper Insurance & Risk Management Strategy
- Retirement & Future Goals
- Debt Paydown Strategy
- Your Personal Finances & Systems
Invest Early & Often
Even if you only have an extra $5 per month to invest right now (no matter what it is that you choose to invest in) get in the habit of doing so. If you plan to invest in yourself, then go to a used book store and find a $5 book that you can buy. If you plan to invest in an emergency fund, then set up an automatic contribution to your savings account. If you want to invest in the stock market, then set up an automatic contribution to your investment account.
No matter how small, start creating a habit that you can continue to build upon. Starting early (or as soon as possible) and investing consistently are two of the greatest tools that you can use.
There isn’t a minimum dollar amount that you need to have to get started investing and there isn’t a threshold that determines how much is worthwhile to invest. Any investment can be worthwhile if it’s made thoughtfully.
