Even though investing money always involves risk, you need to start investing soon if you want to get ahead. With the right investment you will be able to retire on time and live comfortably.
“What is the minimum amount of money to buy a stock? Where and how?” — Kaly from Calgary, Canada.
This is one of the most commonly asked questions from CNNMoney readers. Many people want to become the next Warren Buffett, but they don’t know where to begin investing or even how much money they need to make the first purchase.
Short answer: $5.
Better answer: $500, and only AFTER you have built up your emergency savings.
“We really encourage people to have six months of savings first,” says Yvette Butler, president of Capital One Investing. Once you have a few thousand in savings, then you can start investing.
The goal of investing is to make your money grow faster than it would in a typical bank account (especially since savings accounts barely spit out a little more than 0% interest now). Butinvesting is risky. You can lose money, especially in the “short run.”
Related: The best advice for new investors
How to invest: Once you have the cash, an explosion of trading apps has made it easy to get going.
“We wanted to make our service accessible” to anyone, says Vlad Tenev, co-founder of the appRobinhood that allows you to buy and sell stocks for free. You just have to have enough money to buy the stock you want (e.g. $56 for Starbucks ()).
Robinhood launched in March 2015. It already has about a million users. Tenev says many begin by investing just a few hundred dollars as a way to dip their toes in and learn. Over time, they add more to their portfolio.
Related: The most popular stocks people buy
How to get going with just $5: If you really want to start small you can use an app like Stash orAcorns. Both allow you to begin investing with just $5. Stash offers you a choice of several funds to invest in. You basically end up owning part of a stock — similar to sharing your apartment with roommates. Acorns allows you to deposit “spare change” from say, your coffee purchase. When you get to $5, the app invests that money for you into a diversified portfolio (basically, a mix of stocks and bonds).
How to get great advice: Feeling too intimidated to pick your first stock or fund? There are a lot of great — and cheap — services that will do it for you. Betterment and Wealthfront are good examples. They use computer models to figure …