“Investing” Can Be an Intimidating Word
“Investing” can feel like a very intimidating word. You may want to invest, but investing may seem like something that is above your intelligence or income range. You may think it’s something for people who are “in the know” and not you. You may even think you can’t afford to invest.
Maybe you have some idea that you want to invest in stocks or just open a brokerage account, but you feel like you have no investing strategy, don’t even know investing basics and definitely do not have enough money to even start.
You do have enough money to start. You can open an online brokerage account with literally nothing, and start making deposits as soon as you can.
Why Invest?
The thing is, with the way inflation works, you can’t afford not to invest, whether you want to invest or not.
So before you even consider interest, saving $25 a month is $300 a year.
If you invest $25 a month for twenty years, with a 7% return, you will have $13,023.75.
With the current inflation rate at 3.7%, your cash is literally losing value if it just sits there.
What Can I Do With $25 a Month?
If you’re looking for ways to invest your money but you don’t have a lot of cash to spare, you’re in luck. There are a number of investment options available to you that require just $25 per month.
Step By Step Investing
We will walk you through step-by-step investing with 11 different investments that you can make with just $25 per month. Some of these investments may be familiar to you, while others may be new. But all of them have the potential to grow your wealth over time!
Here are 11 investments you can make for $25 a month:
#1 Index Funds
What are Index Funds?
Index funds are a type of mutual fund that tracks a specific market index, such as the S&P 500. Index funds give you instant diversification because they own a piece of every company in the S&P 500.
Index funds are a great investment for beginner investors because they are low-cost and easy to understand. And since they track an index, there is no need to constantly monitor your investment or make active trades.
With index funds, you can get exposure to a broad swath of the stock market with just one investment. Because they’re passively managed (meaning they don’t require a lot in terms of fees) index funds are some of the most affordable investment options available.
Index funds are a great way to get started in investing because they’re simple. If you’re looking for an easy way to invest your $25, Index funds are a popular choice for investors because they offer diversification and low fees.
Index funds are a way to invest in the stock market in a very diversified way. If you invest in stocks, you are buying a piece of a company that will be worth more or less in the future. When you buy an index fund, you are buying a tiny piece of every company in the index.
For example, the Vanguard S&P 500 Index Fund (“VFINX”) tracks the S&P 500 stock market index. This means that it owns a tiny piece of every company in the S&P 500 index.
The Vanguard S&P 500 Index Fund has an expense ratio of 0.14%, which means that for every $100 you invest, you will pay $0.14 in fees.
This is a very low fee, and it is one of the reasons that index funds are a popular choice for investors.
You can start investing in index funds with as little as $25 per month. Many brokerages offer index mutual funds with no minimum investment required.
For example, Fidelity Investments offers the Fidelity ZERO Large Cap Index Fund (FNILX), which has an expense ratio of 0.
This means that you will pay $0 in fees for every $100 you invest.
#2 Target-Date Mutual Funds
What Are Target-Date Mutual Funds?
A target-date mutual fund is a type of mutual fund that automatically rebalances itself and becomes more conservative as the target date approaches.
Target-date mutual funds are a popular choice for retirement investing because they are easy to set and forget.
For example, the Vanguard Target Retirement 2060 Fund is a target-date mutual fund with a target date of 2060. This means that it is designed for investors who plan to retire around the year 2060.
The Vanguard Target Retirement 2060 Fund has an expense ratio of 0. 08%.
You can start investing in this fund with a minimum of $1000. You can get there quicker by setting aside your $25 a month in a High Yield Savings Account (more on that later) until you have saved the minimum.
Many brokerages offer target-date mutual funds with no minimum investment required.
#3 ETFs
What Are ETFs?
ETFs are similar to index funds in that they track a specific market index. However, ETFs are traded on stock exchanges, like individual stocks. This means that you can buy and sell ETFs throughout the day.
ETFs are a popular choice for investors because they offer the ability to trade throughout the day and they are very low-cost.
You can start investing in ETFs with as little as $25 per month. Many brokerages offer ETFs with no minimum investment required.
For example, Vanguard offers the Vanguard S&P 500 ETF (VOO), which has an expense ratio of 0.03%. This means that you will pay $0.03 in fees for every $100 you invest.
#4 Robo-Advisors
What Is A Robo-Advisor?
A robo-advisor is a type of online financial advisor that uses algorithms to provide investment recommendations. Robo-advisors are a popular choice for investors because they offer diversification and low fees.
For example, the robo-advisor Betterment has an annual fee of 0.25% on balances up to $100,000. This means that you will pay $25 in fees for every $100,000 you invest.
You can start investing with a robo-advisor with as little as $25 per month.
#5 Individual Stocks
What Are Individual Stocks?
Another option for investing your $25 is to buy individual stocks. This can be a more risky investment than some of the other options on this list, but it also has the potential to offer higher returns.
You can start investing in individual stocks with as little as $25 per month. Many brokerages offer fractional shares, which allow you to buy a portion of a share of stock.
This means that you can invest in even the most expensive stocks for just $25 per month.
#6 Bonds
What Are Bonds?
Bonds are a type of investment that pays periodic interest payments. Bonds are a popular choice for investors because they offer diversification and stability.
For example, let’s say you buy a bond for $100 that pays an annual interest rate of five percent. This means that you will receive $5 in interest payments each year.
Bonds can be a more conservative investment than some of the other options on this list, but they also have the potential to offer higher returns.
You can start investing in bonds with as little as $25 per month. Many brokerages offer bond mutual funds and ETFs with no minimum investment required.
#7 Real Estate Investment Trusts (REITs)
What Are REITs?
A real estate investment trust (REIT) is a type of investment that owns and operates income-producing real estate.
REITs are a popular choice for investors because they offer diversification, monthly dividends, and the potential for high returns.
For example, the Vanguard Real Estate ETF (VNQ) is an ETF that invests in REITs. The Vanguard Real Estate ETF has an expense ratio of 0.05%.
Interactive Brokers has an account minimum of $0 and $0 in fees.
You can start investing in REITs with as little as $25 per month. Many brokerages offer REIT mutual funds and ETFs with no minimum investment required.
#8 Peer-to-Peer Lending
What is Peer-to-Peer Lending?
Peer-to-peer lending is a type of investment that allows you to lend money to businesses and individuals.
Peer-to-peer lending is a popular choice for investors because it offers the potential for high returns. For example, let’s say you invest $25 in a peer-to-peer loan with an annual interest rate of 20 percent.
If the borrower repays the loan, then you will receive a return of 20 percent on your investment.
You can start investing in peer-to-peer loans with as little as $25 per month.
#9 Crowdfunding
What is Crowdfunding?
Crowdfunding is a type of investment that allows you to invest in startups and other businesses.
Crowdfunding is a popular choice for investors because it offers the potential for high returns.
#10 Micro-Investing Apps
What Are Micro-Investing Apps?
Micro-investing apps are a type of investment that allows you to invest small amounts of money in a variety of investments.
Micro-investing apps are a popular choice for investors because they offer the potential for high returns and the ability to invest small amounts of money.
You may have heard of some micro-investing apps like Acorns, Robinhood, and Stash.
Many of these apps have no minimum investment required. These all have easy “set it and forget it” options to do roundups or set contributions.
#11 Invest In Yourself
If all of this still seems scary to you, we don’t blame you. Don’t rush into anything you are not comfortable with. When it comes to investments you can make, you can never fail if you invest in yourself.
If you just want to put that $25 a month into a savings account, that is an accomplishment in itself. Look into High Yield Savings Accounts. Some High Yield Savings Accounts (HYSA) can offer up to 4.5 to more than 5% APY.
This means by just putting your money in an HYSA, you can make 5% interest without doing a thing. Your current bank may offer a High Yield Savings Account. Start by calling or going online with your current bank and ask about a High Yield Savings Account.
So Now What?
There are a number of different investments you can make for just $25 per month.
The key is to find an investment that fits your risk tolerance and investment goals.
There are many ways to find that $25 a month; skip the Uber and walk, cook instead of getting takeout one night of the month, or use a tax refund or surprise gift.
The best gift to yourself is saving for your future.
Trust me, the you in ten years is going to thank you!
