Your budget isn’t just about expenses and income, there should be a column for savings and investing too! A monthly approach to generating good financial habits, whether it’s savings or investing, is a good way to create an automatic plan that helps you meet your goals now and in the future. You can even put most of these decisions on automatic draft to some kinds of savings accounts keep to the program without having to consciously keep up. Here are a few strategies to get this done without much effort.
Use Dollar Cost Averaging – Instead of trying to time the market or buy more when the market is down, you can opt to invest just a little each month – on a regular basis. This can take the form of a small investment like $25 a month, or up to larger amounts in the 1000’s. You decide what you have extra each month that can be used to invest in your future.
Investigate DRIP Plans – These plans are not available for all companies, so you have to find which ones you can join. It involves investing directly with the company, instead of going through a broker, and that helps to defray sales commission expenses for the investor. It’s also ideal for small, regular, amounts of investing, rather than large single investment choices.
Use Mutual Funds – No load funds, in particular, work very well with dollar cost averaging. You don’t pay a sales commission every time you buy, so that the money you do invest goes farther. You can set this up to work from your regular bank account.
Invest For Your Age – Periodically review any investment plans at specific ages, like 20’s, 30’s,40’s, and retirement age to see if your portfolio needs to be changed. Younger investors can take on more risk than older ones, that need to be sure their nest eggs are there for them as they retire.
Above all, when you opt to create good investment habits with small amounts, you have to realize that it will take longer to see the effects of the program. You have to commit to this despite market setbacks and all. It won’t always be a winning quarter, but historically you should be head over a long period of time.
