Easy ways to start investing with little money in Canada

The thing that distinguishes the world’s wealthiest 1 percent from us commoners is their ability to multiply their money. Of course, having savings and a cushion fund is necessary, but a stable and expansive financial trajectory starts when the money you have can be doubled or tripled. Needless to say, one of the easiest and safest ways to grow money is through investment.

However, many people in Canada, especially those just starting their careers, are apprehensive about investment, thinking that the money is not enough. However, the time is never right for investment, and no investment is too small. If you understand the prowess of compound interest, dividend yields, and other similar concepts, it becomes easier to take a risk and invest whatever little money you have. The key lesson is that the most significant risk of all is not taking one!

If you have money in your bank that you can ‘afford’ to lose, then the investment is a feasible option. But, before delving into the investment domain, remember that it is a cold and hard field, so brace yourself accordingly. The best part is that you can invest as little as CAD 25. Thus, the age-old excuse of not having enough for investment is no longer valid.

Things to remember before embarking on your investment journey

While it is best to start investing immediately, your goal should be to tackle two pertinent financial issues first:

Pay Off High-interest Debt

If you have high-interest debt, you should fervently try to make payments to lower the loan balance. Why? Because the interest you will pay for the loan will negate any gains, you make on your investment.

Build an Emergency Fund

Begin working relentlessly on an emergency fund so that you possess at least four months or more living expenses saved up. You need to ensure that you can survive financially even if you lose your job or in case of an unforeseen incident.

As soon as you make progress on your high-interest debt, and start building your emergency fund, only then should you ideally start investing.

A Beginner’s guide to investment with little money: Top 5 Tips

1. The Cookie Jar Approach – Saving and investing money are two sides of the same coin. To invest money, you have first to save some up. If you are a spender and not a saver, you can try changing your habits bit by bit. For instance, begin by putting away USD 10 per week. The amount may not seem like a lot, but over the course of a year, it comes to around CAD 500. Try putting away the money into an envelope, a small safe, or the quintessential cookie jar. The electronic equivalent of the cookie jar is an online savings account, which is separate from your checking account. You can withdraw the money in two business if necessary, but it is not linked to your debit card.

2. Start Investing in the Stock Market with Little Money – You probably are of the opinion that investing in the stock market is challenging, as the cost is the barrier to entry. However, that is far from reality anymore, as the internet has pretty much made it a cakewalk for consumers to invest in stocks with very little upfront money. Thus, you can put away a few dollars to acquaint yourself with the investing process prior to making a significant commitment. It is an excellent way to test the waters without risking much. Today, you can find plenty of options to get started in the stock market for as little as USD 1 with no trade commissions. So, there is no reason not to dabble in stock investments, even with little money.

3. Enroll in an Employer’s Retirement Plan – When you have very little money, even enrolling in a Canadian Pension Plan or other employer retirement scheme may seem beyond reach. However, you can start investing in an employer-sponsored retirement plan with so little money that you won’t even feel a nudge in your pocket. For instance, if you invest just 2 percent into a pension plan, it is unlikely that you will ever miss a contribution.

4. Tip Toe in the Real Estate Market – You might be surprised to know that nowadays, it is possible to invest in real estate with significantly less money. A novel category of investment called ‘real estate crowdfunding enables you to own fractional shares of mega commercial properties without the hassles and headaches of being a proprietor. However, you must remember that crowdfunded investments are not minuscule and can usually be in the four figures. In addition, they are also riskier investments because you will be putting in, say, an entire stash of CAD 2000 in one property rather than a diversified portfolio of multiple individual investments. However, the advantages of crowdfunding real estate investments are also apparent. For instance, you share the cost and risk with other investors, and there is no maintenance cost for the property. In a nutshell, real estate crowdfunding can be an excellent way to learn about commercial real estate investments and also diversify assets.

5. Place in Money in Low-Initial-Investment Mutual Funds – To begin with, mutual funds are investment securities that permit you to invest in a portfolio of stocks and bonds via a single transaction. Thus, they are optimal for new investors. However, the problem is that the minimum investments can be between USD 500 to 5000 for a lot of mutual fund companies. However, after thorough, you can find mutual fund companies that cater to newbies by agreeing to automate monthly investments of between USD 10 and USD 100. In case you did not know, automatic investing is a salient feature of mutual fund and ETF accounts. In addition, an automatic arrangement is particularly convenient when done through payroll. You can ask the HR department of your company to set up the automatic deposit situation.

So, there we have it, a crisp overview of the top five ways to begin investing in Canada, even with little money.