Investing Smartly - How to Start Investing with Little Money

Here's where to begin. Long-term investing is the key to reaching financial goals, but it can be difficult to get started if you don't have a lot of money. Let's see how far $50 invested per month go. No matter what you can afford, investing small amounts is still worth it. Motley Fool Contributor, Matthew Frankel, CFP explains how you can still build wealth, even when you're just starting out.

Before you begin investing, be sure you've taken care of more immediate financial needs. This means making sure you have an emergency fund, and that you're paying off any high-interest debt. If you're not and want to start saving for retirement, investing a small amount of money won't move the needle.

When you're ready to start investing, you'll have to decide where to put your money. The most common option is a mutual fund, which pools the money of many investors and invests it in a variety of stocks and bonds. Mutual funds are a great way for beginners to get their feet wet in the world of investing without having to pick individual stocks.

If you're looking for more control over your investments, you can open a brokerage account and purchase individual stocks. The advantage of this is that you can invest in whatever stocks you want and tailor your portfolio to fit your goals. However, it's important to remember that stocks are riskier than bonds and can lose value, so it's important to do your research before investing in any stock.

Another option is to invest in exchange-traded funds (ETFs). ETFs are similar to Mutual funds in that they invest in a variety of stocks and bonds, but they tend to be more cost-effective than Mutual funds. ETFs also offer more flexibility than Mutual funds, as they can be traded throughout the day like stocks.

No matter what type of investing you decide to do, it's important to remember that you should only invest money you can afford to lose. investing can be a great way to build wealth, but it should be done with caution. Start small, do your research, and be sure you're comfortable with the risks before investing.