People often start investing money later than they could have, the most common excuse being “I don’t have enough money.” Before you get carried away and forget to start planning, it may be a good idea to actually look at your bank account and decide if it’s time to start investing. If you have a solid $1,000 to spare, excluding your emergency fund which is far more important, you can and should start investing that money. The earlier you start, the longer you have to make interest on that money you have invested.
When you have decided that you can begin investing, decide where you want your money to go. If you work for a company with a good 401(k) plan that is one of your best bets for an easy investment that will pay off in the long run. Be sure that you will stick with the company long-term before you choose to largely invest. If you do decide to go this route, you can have your company set up your 401(k) so that a set amount of money from your paychecks goes directly into your account. This is great because it doesn’t require deposits from you, and you save money because 401(k)s are not taxed.
If you don’t like your company’s 401(k), don’t think you need to start saving for retirement yet, or have extra money that you would like to invest, you have a couple of other options. Another very safe way to invest your money is through the US Treasury. The simplest way to do this is to put your money in a savings bond, which you buy and then hold on to until it has matured. When it has matured, it is usually worth twice the value of what you paid for it. This is a very safe way to hold on to your money, but it can be very time consuming and it also means in some cases that you cannot access your money until the bond has matured. Before putting too much money in bonds, make sure you know the maturation rate and if you can cash in the bonds early if you need the money for some reason.
Another way to invest your money is directly in the stock market. Depending on where you invest your money, you can earn a lot from investing very little. The easiest way to put money in the stock market is to have a Direct Stock Purchase Plan. This allows you to buy company shares as an individual with no minimum initial investment requirement. If you want to invest this way, you go to a transfer agent who is contracted by the company you want to invest in to manage stock to set up either a Direct Stock Purchase Plan (DSPP) or a Dividend Reinvestment Plan (DRP). The difference in the two is that DRPs are even more automatic than DSPPs because they automatically buy more shares with your dividend payments. Both, however, require very little work outside of setting up an account. Once you have done that you get to sit back and watch your money grow.