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36% of Americans save absolutely nothing for retirement.
80% of people ages 30-54 believe they will not have enough money saved for retirement when the time comes.
You know you need some sort of retirement plan, but can you afford it?
Are you a statistic? Or on your way to becoming one?
Spoiler alert: Yes, you can afford to invest in your retirement
It doesn’t take much to get started and it takes even less to keep going.
Here’s how you can invest for retirement, even if you think you can’t afford it…
What You Need to Know
There are 2 very important things to pay attention to when you are starting with a small amount…
Minimums and fees.
You can’t invest what you don’t have, so you will need something with a low minimum initial investment.
Fees can be a killer. Especially when you’re dealing with small amounts, because fees often stay the same.
So, what kind of investments should you be looking at? Let’s see…
Start With a Good Foundation (It’s Free!)
You can generally start your retirement account for free. That’s right! Free!
Not only is it free, but you have options!
If your employer offers a retirement plan, you should look at that first, especially if they offer a match. There usually isn’t a minimum to get started.
If your employer doesn’t offer a retirement plan, you can open an IRA.
That explains the method you should use, now let’s move on to what you can invest in with just a few bucks.
3 Options to Invest With $100 or Less
There are way more than three options to invest for under $100, but these are the easiest methods to implement right now…and by the way, there may be a fourth method here, because I couldn’t resist — I told you there were more than three!
1. Mutual Funds
The initial investment for mutual funds can be high, but not always. Here are a few mutual funds that you can open with $100 or less…
- UFSGX – USAA First Start Growth Fund ($0 Initial, $50/month)
- MYIFX – Monetta Young Investor Fund ($100 Initial, $25/month)
- Guggenheim Partners (Funds starting at $100 Initial and higher)
Starting with one of these “starter funds” is a great way to begin, but don’t stop there. Once you have enough to afford a better mutual fund, start upgrading!
The fund you really want may have a $1,000 or a $3,000 minimum (especially if you’re looking at index funds), so just climb the ladder. Start with a $100 minimum fund, then go to a $500 fund when you get there, then $1,000, then $3,000. Work your way to the top. You’ve got the idea.
Related: How to Choose Specific Index Funds for Retirement Based on Your Age
2. DRIPs
Dividend Reinvestment Plans (DRIPs) are a great way to start small. A DRIP is a plan that allows you to start as small as buying one share of a company, then continueing to invest your dividends into buying more shares. It compounds over time.
It’s a great way to start small and end up with a lot more than you may expect.
3. ETFs
Many companies offer free ETF trading, so you don’t pay any commissions. This is definitely a great way to start investing. If you want to trade ETFs for free, look to one of these companies…
4. Betterment
I know I said 3 ways to invest, so consider this a bonus. Betterment is a great way to invest and there is absolutely no minimum to start an account.
Betterment is a website that allows you to invest in different ETFs based on the asset allocation you select. You don’t actually pick the specific ETFs, so that may be an issue for some who want to have more control over their investing.
Final Words
These are only a few of the options you have for investing with a small amount.
This all goes to show you that anyone can start investing for retirement. It doesn’t take much.
Once you start contributing to your retirement, keep going! Even if you can only afford a few dollars every month, contribute something.
Photo Credit: Crystian Cruz, Arlo Bates, Chris Potter, Norlando Pobre, marta
Statistics: Retirement statistics.
It’s better to start late than never. That’s for sure! We didn’t get serious about retirement until our late 20’s but we caught up quick once we made the commitment.
My daughter’s college fund is a great example of how small dollar amounts add up quick as well. We put in $25 per month plus her birthday/Christmas money and she already has several thousand dollars saved. Her little sister’s college fund is growing the same way =)
Hey Holly!
That’s awesome! We saw the exact same thing with my daughter’s 529. You barely notice an extra $25 or $50 and it grows so quickly. We use the system that raises our contribution amount by a certain amount every year and we honestly don’t notice it, except for when we actually do the budget.
Starting in your late 20s isn’t bad at all. I know many people who were 40+ before they started considering retirement investing.
Thanks for the comment, Holly!
I hate when people think they need a bunch of money to start investing. There are so many great options and resources out there. Thank you so much for sharing them here!
Hey Shannon!
You’re very welcome! I think people just like to make excuses.
You’re right Kalen, it’s SO important to start saving early. Compounding magic will make meeting retirement goals far easier! $1,000 earning 5% annually for 40 years will be worth over $7,000, but only $2,600 after 20 years.
Hey Kurt!
Thanks for the example. When people see actual amounts it really brings it into perspective. Thanks for commenting!
Great tips Kalen! It’s really hard for some people to find ways to invest with little, but that’s the key. Getting the ball rolling with what you have and being consistent. Love the post!
Thanks Josh!
Like you said, it’s about getting the ball rolling. It doesn’t take much.
Thanks for commenting!
The earlier you get started, the better. Even $100 a month is a start. No matter what, get going ion it would be my advice too.
If you do an IRA, it may even be tax deductible, and cost even less.
Very true! Get started is what’s important. Even $100/month can compound into a lot!
Thanks for sharing!
It’s good that you found these for people to try out. I always thought that the Vanguard Star fund was the cheapest option out there.
Thanks! It wasn’t easy to find multiple options, but they are out there. I may do a post in the future on every fund you can start for $100 or less.
Thanks for commenting!
I started investing for retirement when I was 22, and I started with $100. After that, I tried to put away at least $100 per month, and now it’s far more than that. I also have a company pension but I don’t want to rely just on that. I invest in index funds.
Hey Daisy!
Index funds! My favorite! It’s amazing to see how it can compound. You started early. Great job! You will definitely reap the benefits of compound interest over your lifetime.
Thanks for commenting!
Great tips here, Kalen!! This really proves that ANYONE can start a retirement account if they really want to. Thanks!!
Hey Laurie!
Yes ma’am. You are exactly right. It’s excuse-proof!
Thanks for commenting!
My favorite for investing such a small sum are the DRIPs. Buy only dividend paying stocks. Start with fractional shares through a DRIP or open an account on Sharebuilder and add slowly each month. Between dividend payments and dividend growth your money will begin to compound even without investing another penny. Focus on dividend growth and not current yield and with time your investment will nto only grow but will be able to provide you with an income.
I agree. I love dividend stocks in general and DRIPs are a great way to get started with them.
Thanks for the comment!