Have some time off during the summer months and can spare some time to up your money game? Or maybe you’re raking in extra cash from summer side gigs. Either way, you might want to think about some investing. Sure, the siren of impromptu getaways in exotic locales may be beckoning, but you’ll want to look out for your future self.
Here are some simple ways you can invest in the summertime:
Low-Cost Index Funds
Don’t have $1,000 to get started? Invest in a diversified, low-cost index fund, recommends Sean Gillespie, co-founder and Financial Planner at Redeployment Wealth Strategies. An index fund is a type of mutual fund that is managed by index trends, and thus have lower fees. And lower fees means more of that cash will go back to you.
“Doing that takes care of asset allocation and diversification, two of the three most important habits inside any portfolio, right out of the gate,” explains Gillespie.“(The third aspect is risk tolerance.) “The power of starting sooner rather than later is nothing short of astonishing,” says Gillespie, and you’ll see how much your money will grow. To start, figure out an amount you can comfortably invest every month. Be sure to keep it top of mind, and make it a priority.
Stocks? Maybe Not…
By choosing a widely diversified portfolio that matches how much risk you are prepared to take, you won’t have to go through the stress of picking stocks, explains Miguel Gomez, a Certified Financial Planner at Lauterbach Financial Advisors. And of course, make sure pick a portfolio that matches your specific goals.
For example, if you’re investing for, let’s say, the next two to five years, you probably don’t need to take risks in the stock market, says Gomez. But if you’re squirreling away money for something that’s happening beyond 10 years, then it probably makes sense to opt for a riskier approach.
One of the easiest things you can do is sock away money each month into an employer-sponsored retirement account, such as a 401(k) or Roth IRA. For 2018, the annual contribution limits for a 401(k) is $18,500. The contribution limit for a Roth IRA for individuals under 50 is $5,500.
Find out if your employer offers matching contributions. ”Most employers offer a matching program, where the firm will invest a certain percentage of the funds invested by the individual,” says Sahil Vakil, CFA®, CFP®, and managing director of MYRA Wealth.
You can also commit to start by donating a small percentage, then up the percentage every few months. Another tactic? Contribute part—or all—of your annual raises toward your employer retirement account. That’s money you most likely won’t notice.
The best way to save is not to have to think about it at all. There is a sublime magic to the “set it” and forget it” approach. Your money grows without your having to put in any effort.
Set up auto transfers to an IRA or taxable account, recommends Levi Sanchez, a Certified Financial Planner and co-founder of Millennial Wealth.
“If you’re automating your investments, you’re more likely going to commit to it,” says Sanchez. To start, save a small amount each month, then ramp it up over time. The important thing is to get into the habit of doing it now. That way when you have more to put away, you’ll already have paved the inroads to investing, so to speak.
Another simple way to get started investing is to try one of the handful of micro investment apps out there. Popular ones include Acorns, Robinhood or Stash. There’s a low to no minimum deposit to get started, and you start by contributing a few dollars to your investment accounts.
Acorns rounds up your transactions from your connected savings and credit card accounts. With Stash, you can pick from several different portfolios based on your interests. If you ever want to ramp up your investments, you can set up auto-transfers, or add more accounts. “The amounts are small, but add up over time and are a great way to get started,” says Sanchez.
Invest Extra Money Earned from Summertime Gigs
Summer is a great way to take on side hustles, either from pet sitting for vacationers, helping people uproot to new digs (it is peak moving season, after all) or through ride sharing. While you might want to use a solid chunk of extra summer earnings to pay off debt or for the inevitably expensive holiday season, set aside a small portion solely for investing. You can try a micro-investing app (see above) or make extra contributions to a retirement account.
If you’re juggling multiple gigs, you can designate the money you earn from certain side hustles for “fun” goals, another as “get ahead” money to put toward your savings, and another just for investing. For instance, money you earn kid-watching and as a rideshare driver can go toward your vacation fund, while income coming in from freelance tape transcribing can be used just for investing.
By making investing a top-of-mind priority, you can develop the habits and willpower to keep you saving for retirement. You’ll surely be grateful you made the moves you did today.