Where to invest and save money for beginners in USA? Here is your solution! Investing has always been one of the most effective ways to make money. Investing your money wisely is one of the best things you can do to secure your financial future.
Whether you’re looking to build your wealth, start an online business or purchase your first car, expensive hobby or starting your retirement fund, investing will help get you there.
Try the cookie jar approach
Saving money and investing it are closely connected. In order to invest money, you first have to save some up. That will take a lot less time than you think, and you can do it in very small steps.
If you’ve never been a saver, you can start by putting away just $10 per week. That may not seem like a lot, but over the course of a year, it comes to over $500.
Try putting $10 into an envelope, shoebox, a small safe, or even that legendary bank of first resort, the cookie jar. Though this may sound silly, it’s often a necessary first step. Get yourself into the habit of living on a little bit less than you earn, and stash the savings away in a safe place.
The electronic equivalent of the cookie jar is the online savings account; it’s separate from your checking account. The money can be withdrawn in two business days if you need it, but it’s not linked to your debit card. Then when the stash is large enough, you can take it out and move it into some actual investment vehicles.
Start with small amounts of money, and then increase as you get more comfortable with the process. It may be a matter of deciding not to go to McDonald’s or passing on the movies, and putting that money into the cookie jar instead.
Chime
Chime currently offers a strong 0.50% APY for their online savings account. There is no minimum deposit required and the yield is earned on all balances (no minimum balance required).
Chime is also a top choice for your savings because they include a bevy of other features that really focus on the individual saver.
- 38,000 fee free ATM’s
- Spot Me feature that means you won’t be charged an overdraft fee if you overdraw your balance
- Direct deposit that gets you paid 2 days faster
And if you need a little boost to start saving while earning your APY, Chime can round up your purchases to the nearest $1 to help you save faster and earn faster.
Learn more about Chime or read our full review.
Public
Public, an investing app, offering thousands of stocks and ETFs with no commission fees on trades and no account minimums. With Public, you can purchase most stocks through what Public calls “Slices”- so you don’t have to plunk down thousands of dollars to become a shareholder in huge companies that you want to invest in but cannot otherwise afford.
Public makes investing easy and user friendly: you simply pick your stocks and ETFs, enter the amount of money you’d like to invest, and Public “slices” off a portion of a share to fit the amount you’ve chosen.
Public also offers a social investing experience making it a great option for beginner investors. You become more financially literate while watching what others are doing with their investments. It’s like peeking into someone’s investing account for ideas – but it’s what everyone is doing and totally legit.
Learn more about the Public App or read our full review.
High-yield savings accounts
This can be one of the simplest ways to boost the return on your money above what you’re earning in a typical checking account. High-yield savings accounts, which are often opened through an online bank, tend to pay higher interest on average than standard savings accounts while still giving customers regular access to their money.
This can be a great place to park money you’re saving for a purchase in the next couple years or just holding in case of an emergency.
Certificates of deposit (CDs)
CDs are another way to earn additional interest on your savings, but they will tie up your money for longer than a high-yield savings account. You can purchase a CD for different time periods such as six months, one year or even five years, but you typically can’t access the money before the CD matures without paying a penalty.
These are considered extremely safe and if you purchase one through a federally insured bank, you’re covered up to $250,000 per depositor, per ownership category.
401(k) or another workplace retirement plan
This can be one of the simplest ways to get started in investing and comes with some major incentives that could benefit you now and in the future. Most employers offer to match a portion of what you agree to save for retirement out of your regular paycheck. If your employer offers a match and you don’t participate in the plan, you are turning down free money.
In a traditional 401(k), the contributions are made prior to being taxed and grow tax-free until retirement age. Some employers offer Roth 401(k)s, which allow contributions to be made after taxes. If you select this option, you won’t pay taxes on withdrawals during retirement.
These workplace retirement plans are great savings tools because they’re automatic once you’ve made your initial selections and allow you to consistently invest over time. You can even choose to invest in target-date mutual funds, which manage their portfolios based on a specific retirement date. As you get closer to the target date, the fund’s allocation will shift away from riskier assets to account for a shorter investment horizon.
Robinhood
Robinhood is also designed for young traders new to investing, and Robinhood is currently rolling out fractional share investing to make it easy to start investing with little money.
And the best part? Robinhood gives you one free stock just for joining. That gives your portfolio a small headstart at no cost to you.
Importantly, Robinhood promotes equality of access with a $0 account minimum and no transaction fees. Robinhood also has free options trading. Users who opt for the premium account Robinhood Gold pay $5 a month for access to extra perks like after-hours trading.
Unlike robo-advisors, Robinhood supports and encourages active stock trading. In my mind, trading stocks is not the same thing as investing money for the long-haul. But trading is fun and a great way to learn about how the market works and how companies are valued. And if you can try your hand at trading with small amounts of money, it’s even better. Robinhood’s platform makes trading a snap.
Learn more about the Robinhood App or read our full review.
Chime Disclosure – Chime is a financial technology company, not a bank. Banking services provided by, and debit card issued by, The Bancorp Bank or Stride Bank, N.A.; Members FDIC.
Robo-advisors
Robo-advisors entered the investing scene about a decade ago and make investing as simple and accessible as possible. You don’t need any prior investing experience, as robo-advisors take all of the guesswork out of investing.
Robo-advisors work by asking a few simple questions to determine your goal and risk tolerance and then investing your money in a highly-diversified low-cost portfolio of stocks and bonds. Robo-advisors then use algorithms to continually rebalance your portfolio and optimize it for taxes.
There’s no easier way to get started in long-term investing. Most robo-advisors require just $500 or less to start investing and charge very modest fees based upon the size of your account. All offer automated investing plans to help you grow your balance.
If there’s any downside to Robo-advisors it’s cost. Robo-advisors charge an annual fee equal to a small percentage of your balance. The industry average is about 0.25%. So, if you invest $10,000, you’ll pay $25 a year. That’s not a lot of money, but it begins to add up if you amass hundreds of thousands of dollars.
It’s important to note that robo-advisors fees are on top of the fees charged by the exchange-traded funds (ETFs) that robo-advisors buy to make up your portfolio. You can avoid paying the robo-advisor fees by building your own portfolio of ETFs or mutual funds. For the vast majority of investors, however, that’s a lot of additional work and responsibility.
Wealthfront
A robo-advisor that I highly recommend to first-time investors is Wealthfront. Their fees are reasonable at 0.25%, but the kicker is that you can get your first $5,000 managed free (specific to MU30 readers).
So if you’re looking to start investing with little money, Wealthfront could be the way to go. You will need $500 to get started though with Wealthfront so keep that in mind. As you get more comfortable with investments, you can pick and choose vetted ETFs or invest by category, like tech, healthcare, and even socially responsible investing.
Learn more about Wealthfront or read our full review.
The bottom line? Robo-advisors are cheap and well worth it.
Onjuno
You can also ensure your checking account brings some extra money in. OnJuno offers an impressive 1.20% Bonus on your deposits. The Bonus Rate is credited to your online checking account on the first of every month and only applies to balances up to $5,000. Balances from $5,000 to $100,000 earn 0.25% (an important note: this bonus is subject to change at any time).
Here are a few features that make OnJuno stand out.
- Earn 5% cash back on your spending with five brands that you choose. Brands include popular retailers like Walmart, Target, and Starbucks. Basic account holders get 5% cash back on up to $500 in purchases each year, equal to $25 per year. But if you upgrade to a Metal Membership, you’ll get 5% cash back on up to $3,000 per year, earning you as much as $150 per year.
- No hidden fees or opening balance requirements.
- Fee-free cash withdrawals at 85,000 AllPoint and MoneyPass ATMs.
With OnJuno’s fee-free model, you won’t be spending unnecessary money on service fees and out-of-network ATM charges.
Conclusion
Investing seems alien to many people, but truth is it doesn’t have to be scary. There are plenty of things you can do with your money, and investing isn’t the only option. But of all the investment options out there, few collide with Return On Investment (ROI) when combined with fun and excitement like online casinos.