How To Invest Money In Small Amounts

Only those who already have a lot of money can make more of it. That’s not true. It is also worth investing money for people who cannot invest a large fortune at once – we explain here why this is the case and how it works.

1. Investing smartly is better than saving

The savings account has many advantages: In an emergency, you can quickly access the saved capital because it is not tied up. Furthermore, it does not accept any fluctuations in value and requires absolutely no investment know-how to understand how it works. This is great for the nest egg, i.e. as an iron reserve, for unexpected expenses or for short-term savings goals – for example for holidays, a special gift or to finance an upcoming training course.

The big disadvantage: In the low-interest environment, the savings account is no longer worthwhile because it hardly generates any income. And with inflation, the “savings” even lose value in the long term. This is exactly why it is definitely worth investing even with small amounts – and thus making more of your money. Because even a few hundred francs lose more value in a savings account than in investment.

2. Retirement investment

Your own retirement provision should be the top priority after the nest egg. A retirement plan is not only necessary so that retirees can maintain their usual standard of living, but also a clever way to save taxes and make more of your own money.

Anyone who invests their money from their pension in one or more pension funds can benefit in the long term: Because the investment horizon is usually very long since you can usually only access them when you retire. Even those who only pay for their retirement at the age of 30 still have an investment horizon of around 35 years. This enables investors to take on a little more risk – which in turn opens up higher return opportunities.

Because the longer you invest, the more the possible negative fluctuations in value on the financial markets are offset again. Even with small seed capital, fund shares can be subscribed. And the compound interest effect always comes into play, regardless of whether you invest a lot or little money.

3. Budget wisely

Even if the word “household budget” doesn’t sound particularly attractive, it is at the heart of all money decisions. Especially those who start investing with small amounts should make the budget their best friend and note and plan their monthly expenses and income. Statements such as “I have no idea where all the money went again” when there is still far too much month left at the end of the money then no longer exist. And: A budget also shows exactly where there might be some savings potential – and how much money you can plan for capital investments.

4. Invest regularly

The budget is made and reserved for emergencies, and provisions and short-term savings are planned. Excellent! What is left can now be invested. The easiest way to do this is with a target savings plan. Here, investors automatically buy fund units for a certain amount every month. So there is no risk of “parking” the money that was actually planned to be invested in a private or savings account and then accidentally spending it. And investors benefit in several ways: not only from the long-term returns on the financial markets but also from the above-mentioned compound interest effect and the average price effect.

5. Save to invest

Not everyone wants or is able to pay regularly and automatically into a target savings plan. Even just buying a stock, bonds (buy bonds 2022), or an ETF every now and then when there’s money around is also a bad idea. Because with every purchase and sale, fees are incurred on the one hand, and on the other hand, this type of investment also requires a great deal of financial know-how.

Another option for investors who do not want to take care of their investments on a regular basis could be to leave their wealth management to experts. However, this requires a certain amount of start-up capital. In return, professionals then take over the entire management of the assets.

Anyone who prefers to invest a one-off amount instead of regular small amounts can also save this up with small amounts: for example with the money that is still in the savings account at the end of the year after deducting the nest egg and the savings amounts. Or the 13th month’s wages and some savings. In this way, even small amounts become a sum that can be invested and increased without much effort.