Investing can be intimidating if your just getting started for the first time. Many think they need to pay high fees for a financial planner to help them out, and others just aren't familiar with where to get started in general. Not to mention the complications of what to invest in, different investment options and risk tolerance.
Thankfully, there are easier ways to invest than you think. Modern technology has allowed any investor to get rid of the confusion and make things very simple. Here is how to invest money online without any prior experience, and with little money to start out.
Invest Money Online Without Prior Experience
The reason many people don't invest in the stock market, is because they don't know how to and don't have any experience, or they don't have any money to set aside to invest with. When times are tight financially, even just $50 is a big expense and difficult to set aside for many.
So how is one to invest in the stock market without any money, without any prior experience, and still invest in a diversified portfolio? It's easier than you think. Here's how…
The easiest way to start
Investing originally started out by exchanging physical stock certificates in person with other investors. Each certificate was a contract of ownership of shares of stock. Usually only people with a lot of money were able to participate.Then as computers became more accessible, investing became more digital and also required the professional help of a financial adviser. Along with professional help came costly commissions and fees.
Today, investing has become even easier for anyone with an extra $5 to start investing in a diversified portfolio. With modern investing platforms that integrate technology and algorithms that automate expert help, you can take that extra $5 and invest it in the market in just a few minutes among a professionally diversified portfolio.
This is done through a “Robo Adviser”. A robo adviser is simply an investing platform designed by professional investment and technology experts, that use algorithms to customize a diversified investment portfolio for its customers. It automates your investments for you and can be done at a fraction of the cost of a pricey financial adviser.
What to invest in
With the help of reputable robo advisers, you can design a professional investment portfolio by simply answering a few quick questions about what you want to achieve with your invested money.
You will be asked about your investment experience, how many years you plan to keep the money invested, how comfortable you are with risk, and your expected goals and rate of return.
The answers to these basic questions result in the robo advisor putting a diversified investment portfolio together for you, allowing you to spread your $5 (or however much money you want to invest) among hundreds of companies.
This reduces your overall risk in that, if one company goes under, you don't lose all your investment because you have your risk spread among hundreds of companies. This is what is referred to when we discuss having a “diversified portfolio”.
What about minimum investment amounts and fees?
Robo advisers use technology, expert investment professionals and complicated algorithms to automate the portfolio recommendations. This reduces the amount of fees and costs it takes to design an investment portfolio, resulting in robo advisers being the absolute best option for those not wanting to pay an arm and a leg to hire a professional.
Most robo advisers charge about $1 per month for accounts under $5,000 balances, and usually about 0.25% per year for accounts over $5,000 balances. The fees are so low that you will probably make your money paid in fees back on your return on investment in just a few days or weeks time!
The automated technology and diversified portfolio recommendations also make it easier for everyone to get involved in the stock market with as little as just $5. This takes the minimum investment barrier out of the way, allowing everyone to participate in the stock market much easier.
Our top pick to invest money online
There are plenty of reputable and helpful robo advisers available that you can choose from. Most of them will have a specialty that sets them apart from their competition. Some will give you unlimited and free access to questions to an investment expert at any time, and others allow you to invest in and create your own investment portfolios that others can also invest in.
If your goal is simply to get involved in the stock market, and you don't have any prior experience or much money to start, our top pick is Acorns Investing.
After all, you're only investing about $0.75 at a time is all! You hardly feel any difference in the budget, and before you know it you've got a good chunk of change invested in the market.
They cost just $1 per month, and even partner with hundreds of the top retailers that will give you free money deposited into your investment account when shopping at their partnered retailers.
Is Acorns safe to use?
Absolutely. They have a clientele base of over 3,000,000 users (as of this writing) and growing quickly. They have been featured on major news companies like ABC News, US News, CNBC and many others as a top pick for investing money online.
Their investment portfolios are put together by professional experts, with the aid of Nobel prize winning economic advisers as well. They will even notify you if they see your account balance is low on funds before withdrawing your invested round ups to ensure you don't incur problems with your bank for overdrafts.
How to start investing with Acorns
All you need to do is follow their 5 minute account setup process to get started. They will ask you for your personal contact info along with your bank account info to link to. Lastly they will ask you a few questions to determine your customized investment portfolio, and the rest is automated from there!
You get access to free investment education and knowledge from the experts and even get to see your projected balance 10, 20 and even 30 years in the future.
Ready to start a budget friendly investment strategy? Start your Acorns Investing account right here!
Want more info about Acorns Investing? Take a look at our in depth review on Acorns Investments.