The best ways to invest a small amount of money each month can only be determined by analyzing the personal budget with a critical eye. One hundred dollars will generate approximately 23 cents in one month at current simple savings account interest rates. However, one hundred dollars of credit card debt will cost close to $2.00 at current interest rates charged. Retiring existing debt may be the best initial decision.
Having determined that a small monthly sum is available for investment, there are options that may maximize the long term return available from any sum that can be invested.
~Employer fund-matching programs
Those who work for larger companies may have access to fund matching programs offered to their employees. The human resources department should have information available. Many school systems have such programs available to all employees, as well as memberships in credit unions that pay dividends to enrolled members.
~FDIC insurance protection
Funds invested into federally insured banks and savings and loan institutions are also good areas to consider. Rates of return vary according to what type of savings vehicle is selected. Information should be obtained locally from bank officers who specialize in the various savings programs available within their organizations.
A personal visit with a local banker is often better than a quick telephone call or investigating savings account offerings via the Internet. Chances are that confusion will be less, and potential pit-falls of some types of savings options may be discovered. In other words, investing money is too important to not take the time to fully understand everything involved in investment funds.
Small investors should also consider what penalties may exist for withdrawing funds early from their investment account. Most investment programs have substantial penalties that apply. If the investment that is being considered is also your emergency fund, look for investment programs that have minimum penalties for withdrawing funds.
Some individuals prefer to invest in commodities such as precious metals, and other areas that have risks involved. Wealthy investors can afford to weather the storm if prices go down, but small investors may not be so fortunate. If one hundred dollars per month describes your investment potential, risky placement of those funds would be difficult to recommend.
Before making any final decision about small investments, make sure that you are not failing to eliminate high cost debt in favor of being paid lower rate dividends on your money. If long term financial security is being sought, be diligent in deciding how to use what money you have.