While $150 a month is not a whole lot of money, it can really add up if you invest it in the right place. By
making small monthly investments over a long period of time, you can grow and preserve your capital, while minimizing risk.
If you can budget $150 a month to invest, there are a variety of options available to assist you with your financial goals.
Your Options For How To Invest $150 A Month
It can be a challenge to know where to most effectively invest $150 a month, because it is not a relatively large sum of money. The key is to identify your investment objectives, your risk tolerance, and your intended use for your capital.
High Interest Savings Accounts
While savings accounts may not be the fastest route to wealth, it is the best risk free, government insured way to grow your money. By investing $150 a month you are on your way to accumulating a healthy savings account, that then can be moved to other high-growth investments.
Shop around for banks that offer higher interest rates, as rates vary from bank to bank, and some online banks offer up to 2%. While this may pale in comparison to gains that can be made in other riskier investments, it can be a stable avenue to grow and preserve your capital.
How To Invest $150 A Month In The Stock Market
Stocks have historically been the best path to real, lasting wealth, but carry considerably more risk than an FDIC insured savings account. When you invest in stocks there is the very real risk of losing money, including loss of principle.
When considering stocks as an investment option, it is important to consider the time commitment required to do research, as well as commissions charged by brokerages to execute trades. Many online brokerages offer automatic investment plans where you pay a lower commission on trades.
If you chose to utilize this feature, it is wise to invest larger amounts that are spread farther apart, to minimize the commissions that could eat away at your bottom line.
If you are unsure which stocks are the best investments for you, research low-cost ETFs, or exchange traded funds. These funds commonly track a benchmark index or sector, and trade like stocks. These types of funds mitigate risk with diversification, but are still subject to the day-to-day volatility of the stock market, and may not be right for everyone.
Investing In Mutual Funds
A mutual fund is a product provided by a company that pools the capital from individual investors to form an investment portfolio. By purchasing shares of a mutual fund, an investor is putting their capital into a pot to acquire a portion of the fund’s portfolio. In order to grow the fund, an investment manager buys and sells the stocks and bonds in the fund’s portfolio.
While many mutual funds have a minimum investment amount, there are some that will waive this stipulation if you agree to an automatic investment plan that automatically withdraws $150 a month from your bank account to the mutual fund.
Your Intended Use For Your Capital
When deciding how to invest $150 a month, keep in mind the intended use for the money. If you expect to need your money in the next five years, it is not recommended that you invest in stocks. It may be more advantageous to explore high-interest CDs or traditional savings accounts.
Carefully analyze your individual investment goals and objectives before committing any capital to an investment.