Investment, unlike popular belief that bigger amount is needed, can be started with smaller amount. Starting to invest with a small amount of money isn’t an issue. However, it’s important to know how much you can afford to invest, as you don’t want to harm your personal finances in the process. Investors at Blackwell have said, “as long as you aren’t using money [to invest] that you need to cover day to day expenses such as food, rent and high interest debt payments, I recommend you start investing.” The best way to start is to practice budgeting. The most popular method of budgeting is the 50/30/20 method. Here 50% of your income is spent on needs (such as rent, food, loans etc), 30% is spent on wants (entertainment and leisure) and 20% is saved.
To add to this, the method of regularly investing small amounts of money is known as Dollar Cost Averaging. Dollar-cost averaging (DCA) is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of an asset (like a stock or an ETF) in an effort to reduce the impact of risk on the purchase. This strategy helps reduce the burden and stress of trying to time the market to make the most out of your purchase and is one of the best strategies for investors that have a small amount saved up.
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