If you are 25 years old and start with $1,000 and invest another $1,000 each year up to retirement age at an interest rate of 7%, you would have $214,600 at age 65. Start at age 30 and you would have $148,000. Getting that $1,000 to invest is as simple as cutting out a Starbucks coffee out of your daily life or maybe cutting out cable tv, or a couple donating plasma a few times a year!
IRA or Roth IRA at a Discount Broker
This is a more traditional approach to investing and I believe is a must do for everybody. Nowadays you can open up an account at discount brokerages such as Scottrade and Etrade to invest any amount of money. The great thing about these online brokerages is that you have access to an incredible amount of information, trading tools, and investment choices.
Incremental Purchase Plan
These plans automatically buy shares and fractional shares of stocks, mutual funds and exchange traded funds (ETFs) using a set amount of money each month. This is a really cool way to slowly but surely build up an investment portfolio in virtually any dollar amount you allocate. This provides a lot of flexibility as you can spread out your dollars over multiple investments a fraction at a time.
You can buy U.S. Treasuries through this simple site and is a very conservative way to invest your $1,000. A great bonus is that you are not subject to commissions or fees for holding Treasuries.
The two most popular products individuals can buy directly from the U.S. Treasury are I Savings Bonds and Treasury Inflation Protection Securites (TIPS), because both protect you from inflation.
Dividend Reinvestment Plans (DRPs)
DRPs is when you buy stocks directly from a a company and you reinvest the dividends to automatically buy more shares of the stock. All you have to do is set up an account with the company and fund your account and let the account administrator reinvest your dividends. Some brokerages such as Wells Trade brokerage from Wells Fargo allow DRPs programs directly from your trading account.
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