We regularly hear, “I want to invest, but I don’t have that much money.” No worries, there’s no need for that at all! We understand the question well, that is still a bit of the taboo surrounding investing: you have to have a lot of money to be able to invest. But: to start making smart money moves when you’re rich, is like starting dating when you’re married.
So the other way around, wrong order we take when we think “I have no money to do smart things with my money.” Anyway, depending on your personal situation, your income, your buffer cq savings account, the investment platform and your investment strategy, you can start investing from as little as a tenner to per month. Not a word lied. Read along quickly to see exactly how this works.
Note: Investing means risk, we know. So invest only with money you can really spare!
Okay, let’s go!
Long-term
Investing is best done for the long term. The biggest advantage of this – long-term investing – is the operation of compound interest. In short: interest on interest, your wealth is going to pay for itself. Your money goes to work actively. In addition, you minimize risk if you invest for at least 10 years. Read how here.
Automate
You can invest as little as a tenner a month. The moment you start automating your deposits and start seeing them as a fixed expense – in addition to your mortgage, rent, food and insurance – then investing eventually takes care of itself. Without putting much effort into it, you are smart about your money every month.
The investment platform
Okay, okay, nice that introduction about long term and automation, but of course the question burning on your lips is: how much money do I need to start investing? This depends in part on 2 aspects: the investment platform you choose and your personal situation. Your personal situation tells you whether you put in €10, €50 or €100 (or whatever amount) monthly, and the platform tells you what options you have. By platform, we mean an online broker such as Degiro or BUX Zero, or an online bank that facilitates investing such as ABN Amro, Semmie and Brand New Day. But these do not have to be fat grub, this can be as little as a few tens per month.
There are very many brokers and banks on the market, and which one suits you best depends on how you want to invest. For example, at Degiro and BUX Zero you can invest yourself (active investing, read here what that is) and you can invest passively at Brand New Day or Semmie, for example. Check out an article where we compare different platforms here .
The inset
With most brokers, you basically have no minimum required deposit. At Degiro, you can invest in stocks and ETFs. Let’s say you want to invest in the iShares S&P500 ETF, which costs €28 at the time of writing, so you need to have at least that amount to put in.
At Brand New Day, things work differently. That’s where you automatically transfer a fixed amount each month, an amount of your choice. This money is invested to the penny rounded, spread evenly. So here you can also choose to transfer €50, which is then automatically invested for you by Brand New Day in accordance with your chosen portfolio.
The investment strategy
A well-known long-term strategy that many people use is a buy-and-hold strategy with monthly deposits. Investing a fixed amount each month, in funds or ETFs, and trusting that time on your side is the greatest trick, and thus the money goes to work for you and you benefit from the interest-on-interest effect.
So?
You don’t have to have a huge amount of money to invest, you can start from as little as a (few) tenner(s) per month. Given the additional transaction costs (each time you invest money in a security such as a stock or ETF you pay transaction costs), one tactic could be to transfer €50 a month to Degiro, and then after six months invest that amount all at once, thus reducing transaction costs. But, another argument to do deposit every month is that by doing so you spread out in time. In any case, make sure you set up an automatic transfer each month so you can’t forget about it AND spend the money elsewhere.
Broaden your knowledge about investing a little more? You can do that here!
