Hello budget pals! How’s your budgeting been? Mine has been a-okay. 

Aside from saving money and eliminating debt, I believe that we should also invest for our retirement. One day, we will all be old and we’ll need money to take care of us. With this said, I have five simple rules in investing.

1.) Start small

Baby steps. It’s all about baby steps. Like in everything else, start investing with the amount that you’re comfortable with. If you can only invest $20, invest only $20. If in the future, you would like to invest more, then do so. But when you are just starting, start small.

2.) No Minimum Requirement

Investing, sometimes, is kind of like an exclusive club. You have to pay to enter. You pay the cover charge. Most funds require you to come up with the minimum amount of investment before you can invest. The good news, however, is that there are funds that doesn’t require any minimums. I chose the latter for my investing strategy.

3.) No load, no transaction fee funds

There are tons of funds where we can invest. And there are also tons of funds that have load in them – a commission charge. Aside from this, there are also funds that charges transaction fee for every transaction. You buy a fund, you pay a fee. You sell a fund, you pay a fee. Crazy. As your budget pal, and in conjunction with #2 rule, I opt for the no load, no transaction fee funds when investing.

4.) Watch out for the NET expense ratio

To put it simply, net expense ratio is the “service fee” that you pay the company that manages the fund that you chose to invest in. This is not to be confused with the load and transaction fee. Before investing, look at the portfolio of the fund. The net expense ratio should be clearly indicated in the fund overview. Rule of thumb, the lower the net expense ratio, the better. Why? Because you will be paying lesser service fee.

5.) Diversify

I am sure that most of the financial advisers and bloggers out there will agree with me when I say that we all should diversify our investments. The reason being is that if one of our investment funds should ever fail, and it will happen, we have other funds to fall back to. The more diverse your investments are, the better. I personally like mutual funds. Mutual fund is a collection of different stocks and other assets, from different companies pooled into one. You can buy a mutual fund for as low as $20.

But where to start?

Good question. I have only used Etrade.com and TDAmeritrade.com in the past, so I can only recommend these two. Both website offer a plethora of investment information. You should check it out. Of course, there are other websites out there. Check the others as well. Learn investing one day at a time.

Honestly, it was daunting at first, and OMG, boooooring, but once you psych yourself that it will be good for you in the long run, you’ll eventually get into the habit. Good luck!