The number one thing holding most people back from investing is the thought that they don’t have enough money to invest. Thanks partly to the market crash a decade ago and partly to the current market focus on disruption, there’s a new level of transparency expected when it comes to finances. Regardless of your age or income, this shift can benefit you. Now, financial trading is possible for anyone. Here are two ways to start investing with low startup capital.
With a name that sounds like a discount code, LOYAL3 is sort of like the discount code equivalent of purchasing stocks. Whereas normal stock purchasing entails purchasing at least one share, with LOYAL3, you can purchase a part of a share. When the general beginner tip for buying stocks is to buy what you like, in the case of Amazon or Google stock, individual stock prices are over $850 a share. With LOYAL3, you can purchase as much or as little of a stock as you like. For example, you could purchase $100 worth of Amazon stock. Or, you could purchase $10 worth of Apple’s stock, currently over $100 a share.
Their company motto is “Own What You Love,” and LOYAL 3 makes it possible. Their trades are fee-free and you can begin trading with as little as $10. What are the drawbacks? There is a number, but they mostly apply to people who likely wouldn’t need this platform to trade, anyway. For example, the maximum stock purchase for a publicly traded stock is generally $2500 per transaction and $5000 in any 30-day period. LOYAL3 also uses a daily batch or combined order process, meaning they execute their trades only once per day. This means that your price may differ, even quite significantly, from the market price when you place your order. This isn’t the platform for high-risk trades because you have no control over the time of purchase or sale, except that it’ll happen sometime during the day your request it.
If you view this as a sort of DIY mutual fund, you’ll be pleased. You can pick, say, 10 different $10 shares and track your progress over time. Perhaps the best benefit of using LOYAL3 is the access to IPOs at the same price and time as Wall Street. Remembering the single day batch process will mean your price will slightly be a bit off, it’s still a great opportunity to “get in early” on new offerings. Use LOYAL3 to get your feet wet in the big kid pool.
With a visually appealing user interface, Betterment is a one-stop shop for investing. They have advisers and traders in-house. According to their website, their only fee is an annual one. Their base level no-minimum account balance investment option has a modest 0.25% annual fee. While this option doesn’t include access to licensed financial experts, you can sync other investment accounts with Betterment, so you still get access to advice across all of your investments via their automated portfolio management platform.
Betterment’s systems claim to generate 2.9% higher returns than a typical DIY investor because their accounts have lower fees and do things like automatically reinvest, so you’re not losing money by holding cash in your account.
Access to their financial professionals comes when you maintain a higher minimum balance (100k or 250k) and pay a higher annual fee (0.40% or 0.50%, respectively). As an aside, there are no fees charged on investments over $2 million, which means a lower effective fee rate when you’re investing amounts over the $2 mil range. This feature makes Betterment appealing for small time traders as well as big fish.
Some of the features may overwhelm a beginner, but features like their Investing 101 blog aim to distill the intricacies trading, making it approachable for anyone. Their upper-end features ensure that as you learn and grow as an investor, you stay with Betterment.
What other low investment options do you use? How did YOU get started investing? Let us know in the comments below.