No matter how much or how little money you make, it is never too early to start saving for your future. The sooner you get started with your investment plan, the larger your nest egg can grow. While putting money aside is particularly hard for those earning substandard wages, minimum wage workers have a number of investment vehicles at their disposal.
Invest in Your 401k Plan: If you work for an employer who offers a 401k program, participating in that plan can give you exposure to the stock market. Even if you invest only 1 or 2 percent of your income, that is better than nothing. Investing even a small amount can instill the discipline it will take to build a nest egg going forward and allow you to put more money aside as you begin to earn more. If your employer matches part of your 401k contributions, strive to raise your contribution percentage until you are earning the full company match.
Employee Stock Purchase Plan: Some employers offer their workers the chance to purchase shares of company stock through payroll deduction. Companies often institute such plans to foster an ownership culture among their workforce, and to allow those loyal employees to participate in the success of the firm. Employees can contribute as little as 1 percent of their pay to the plans, making it an affordable way for minimum wage workers to accumulate shares of stock.
Dividend Reinvestment Programs: Dividend reinvestment plans allow individuals to buy shares of stock directly by investing a set amount of money every month or week. Those plans allow investors without a lot of money to participate in the stock market and accumulate shares of stock, all without paying a brokerage commission. Minimum wage workers can get started by contacting companies whose stocks they want to buy and asking if those firms sponsor a dividend reinvestment plan.
Mutual Funds: Mutual funds pool the investments of many different investors, making it possible for those with small amounts of money to participate in the stock market. Every mutual fund company has a different minimum investment requirement, but those minimums are sometimes waived for investors who agree to invest consistently each month.
Take Chances With Penny Stocks: If you see a trend of buyers in a brand all over the place and think the trend will continue, call a good professional and have them do some work to help you see if it might be a good buy, if it is, buy some. It doesn’t have to be much, it could be $100, but that small amount being put to work can be more valuable to you in the long run.
While it will always be difficult for low income investors to pay the bills, let along build long term wealth, there are a number of vehicles available to make investing and saving a lot easier Implementing a strategy of saving and investing from the start is extremely valuable, and if you can do it while earning a substandard wage, it will be that much easier when you start to move up the income ladder.