By Hanniz Lam

You have managed to save a bit of money and the question on your mind is “I’m thinking about starting to invest, but is this a good time?”

Waiting to invest until you perceive the market to be down means you’ll miss out on precious time when your money could be compounding. After all, our perception of what’s “up” or “down” is relative to a much smaller sample size of market moves than what’s historically (and statistically) significant.

But what happens if you try the mystical “buy low, sell high” strategy? J.P. Morgan Asset Management found that if you missed even just the 10 best market days between 2002 and 2021, your total return was nearly cut in half. Should be pretty easy to not miss the best days, right? Turns out, it’s not: Seven of the 10 best days occurred within two weeks of the 10 worst days.

So it might feel counterintuitive, but when the market drops, it’s a good idea to keep putting your money into it because shares cost less than they did yesterday.

Before you put your hard-earned cash into an investment vehicle, you’ll need a basic understanding of how to invest your money the right way.  There is straighforward formula.

It’s easier if you invest only for long-term goals. The reason you don’t invest money you may need in the next five years, is because it’s highly possible the stock or mutual fund you purchase will drop in value in the short term.

If you need those funds for a large purchase or emergency, you may have to sell your investment before it has a chance to bounce back, resulting in a loss.

But if you’re investing for the long term, those short-term drops aren’t of much concern to you. It’s the compounding gains over time that will help you hit your retirement or long-term financial goals.

The best way to invest your money is whichever way works best for you. To figure that out, you’ll want to consider your investing style, your budget, and your risk tolerance.

When to start investing

While the goal is to start investing immediately, you should tackle the following two financial issues first:

  1. Pay off high-interest debt. Do you have any high-interest debt? You should aggressively try to make payments on this to bring the balance down — because the interest you’ll pay will negate any gains you make on your investments.
  2. Build an emergency fund. Work on an emergency fund so that you have three months or more of living expenses saved up. You need to ensure you could survive financially if you lost your job or if an unexpected issue were to occur.

Here are seven ways to start investing with little money.

1. Try the baby steps approach

Saving money and investing it are closely connected. In order to invest money, you first have to save some up. That will take a lot less time than you think, and you can do it in very small steps.

If you’ve never been a saver, you can start by putting away just RM10 per week. That may not seem like a lot, but over the course of a year, it comes to over RM500.

Try putting RM10 into an envelope, shoebox, a small safe, or even that legendary bank of first resort, the cookie jar. Though this may sound silly, it’s often a necessary first step.

Get yourself into the habit of living on a little bit less than you earn, and stash the savings away in a safe place.

Instead of a savings jarm you can save using an online savings account dedicated to just SAVING.

When you’ve met your target, you can take it out and move it into some actual investment vehicles.

2. Let a robo-advisor invest your money for you


Robo-advisors entered the investing scene about a decade ago and make investing as simple and accessible as possible. You don’t need any prior investing experience, as robo-advisors take all the guesswork out of investing.

Robo-advisors work by asking a few simple questions to determine your goal and risk tolerance and then investing your money in a highly-diversified, low-cost portfolio of stocks and bonds. Robo-advisors then use algorithms to continually rebalance your portfolio and optimize it for taxes.

There’s no easier way to get started in long-term investing. Most robo-advisors require very little cash to start investing and charge very modest fees based upon the size of your account. All offer automated investing plans to help you grow your balance.

If there’s any downside to robo-advisors, it’s cost. Robo-advisors charge an annual fee equal to a small percentage of your balance. 

It’s important to note that robo-advisor fees are on top of the fees charged by the exchange-traded funds (ETFs) that robo-advisors buy to make up your portfolio. You can avoid paying the robo-advisor fees by building your own portfolio of ETFs or mutual funds. For the vast majority of investors, however, that’s a lot of additional work and responsibility.

The bottom line? Robo-advisors are cheap and well worth it.

3. Start investing in the stock market with little money


When it comes to investing in the stock market, cost is often the barrier to entry. It takes money to make money, right?

Not anymore. The internet has made it easy for consumers to get started with very little upfront money. That means you can put a few dollars in to familiarize yourself with investing before making a bigger commitment. It’s a great way to learn about investing while putting very little money at risk.

Today, there are increasing numbers of options that have swung open doors to a new generation of investors — letting you get started with as little as $1 and no trade commissions.

In the past, stockbrokers charged commissions of several dollars every time you bought or sold stock. That made it cost prohibitive to invest in even a single stock with less than hundreds or thousands of dollars. In fact, $0 commissions have been so successful they’ve disrupted the entire investing industry and forced all the major brokers — from E*TRADE to Fidelity — to follow suit and drop trading commissions.

Plus the ability to invest in companies with fractional/partial shares is a complete game-changer with investing. With fractional shares, it means you can diversify your portfolio even more while saving money. Instead of investing in a full share, you can buy a fraction of a share. If you want to invest in a high-priced stock like Amazon, for instance, you can do so for a few dollars instead of shelling out the price for one full share, which, as I write this, is around $2,434.

Put your money in low-initial-investment mutual funds

Mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds with a single transaction, making them perfect for new investors.

The trouble is many mutual fund companies require initial minimum investments of between $500 and $5,000. If you’re a first-time investor with little money to invest, those minimums can be out of reach. But some mutual fund companies will waive the account minimums if you agree to automatic monthly investments of between $50 and $100.

So when is a good time to start investing? The answer is exceedingly simple — as soon as reasonably possible, assuming: All of your high-interest (read: credit card) debt has been paid off.


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