When you think "stock market" maybe you think: It's a place where wealthy people make even more money. But did you know you can use the same stock market strategies that work for the ultra-rich starting with as little as $50 a month? The same amount you spend today for a mani-pedi, consistently invested over time, can ensure your financial security. If you're in your 30s now and you get started investing that amount right away, you're likely to be a millionaire by the time you're ready to retire.
It gets better. Experts know there are a few stock market strategies that actually work. The good news is, the best strategies work much better when you invest small amounts of money over time rather than a big lump sum all at once. Brilliant! Especially if you're busy juggling priorities and still want to get some money working for you. If you're on a budget, that small amount of money is all you need. Plus a little discipline and some patience.
So here's the concept: This professional investing strategy is called dollar-cost averaging. It might sound complicated, but this is actually low risk and very simple. Here's how it works.
Once you've opened an investment account with a brokerage firm or mutual fund that caters to smaller investors, you can start working your way into the market by investing as little as $50 a month into a fund that gives you broad exposure to the overall stock market. In other words, instead of just buying shares in one particular company, your $50 buys you tiny pieces of lots of different stocks across different industries. Because you continue to invest systematically each and every month, your $50 will buy some shares when prices are down and again when stock prices are higher.
Eventually, the average cost per share of the stocks you buy into will become smaller and smaller. Dollar-cost averaging lessens the risk of investing a large amount all at once.
It's hard to find one strategy that experts agree works for all investors, but this is one of those strategies. Dollar-cost averaging is a great wealth builder because it's a time-tested strategy that takes an investor off the emotional roller coaster of worrying or guessing when to buy or sell stocks. Keep investing $50 a month and watch your small savings turn into real money. It's important to establish an investment account with a respected discount broker so your investment doesn't get eaten up by high transaction fees.
In my next post I'll show you how to find the right online broker and set up a brokerage account and get going!
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