Investing a small amount of money

[haidut]

Greetings,
I found out about your website via google search and I want to ask some questions about investing.
I'm a student and I managed to save a small amount of money. About 250$ are sitting there in my piggy bank, so I was wondering if there is a way to make them work for me.Since I'm new to financing I'd appreciate your advices on how to increase those 250.
I appologise if this ism't the right place for this question.

[humandraydel]

Congrats for taking the first step in saving/investing! It's a long journey, and you have to start somewhere. I think for someone saving their first $250, the best option is to just save it in a savings account. You won't get much interest, but a saving account with some cash in it can keep you from going into debt whenever emergencies (car repair, doctor bill, etc) arise. And by NOT going into CC debt, you'll save by not paying 15-20% on credit card debt.

[snafu]

Good on you for saving $ 250. and seeking info to make it grow. I too suggest researching an electronic bank with the best savings rate. Add to it as possible and meanwhile start looking at the minimum requirements of low cost, Index Mutual Funds [MF]. Vanguard would be a good example of low fee MF. It helps to have a plan like 20% of all monies, no matter the source goes to savings. Do you have a part time job? Can you walk dogs, cut grass, look after a neighbor's property while they are on vacation, babysit, paint fences or any of the myriad of tasks teens are hired. A job and the responsibility attached can offer benefits beyond just money.

[Petunia 100]

Greetings,
I found out about your website via google search and I want to ask some questions about investing.
I'm a student and I managed to save a small amount of money. About 250$ are sitting there in my piggy bank, so I was wondering if there is a way to make them work for me.Since I'm new to financing I'd appreciate your advices on how to increase those 250.
I appologise if this ism't the right place for this question.

Do you support yourself? If so, and this is all the savings you have, you don't really want to invest it. Investments go up and down. You don't want it to be down when you need to sell and get your cash.

If you intend to put this money away and not touch it for at least 5 years, then investing it makes sense.

Are you familiar with the term "mutual fund"? A mutual fund accepts money from lots of different investors, then pools it and buys securities (stocks and bonds). There is a fund manager, or team of managers, or the fund simply tracks an index. The costs are shared equally by all investors, and so the costs reduce what you earn.

Most mutual fund companies want more than $250 to open an account. However, there are a few which will let you start with that amount. One such mutual fund company with which I am familiar is Pax. You can learn more about them on their website. Home | PAX World

Snafu's suggestion of Vanguard is an excellent suggestion. In my opinion, Vanguard is the very best mutual fund company to invest with. However, you can't get started at Vanguard with less than $1,000.

Good luck, and keep learning!

[haidut]

Thank you for the quick replies !
I do not support myself so these 250$ are not vital for me. I do work part time, that is how I save for vacations ect. but I can never get enough to complete bigger personal goals (buying a car for example) The problem is that I can't save a lot more than these 250$ a year so I'm looking for other solutions and that is how I got this idea. I am absolutely new to this thread so please explain everything really simplified, thanks I looked through PAX and Vanguard's websites but I couldn't navigate good, I did not understand everything. My idea is to make these money work for about 5 years with the intention of reaching about 5000$. Could you suggest plans that might work like this?
I'm sorry if my questions are stupid, I'm still new to this, thanks

P.S. I forgot to add that I live in Bulgaria, EU, so I'm interested in international plans or whatever they are called

[9symphony9]

A bank CD is good but the rates are a bit low, but still higher than a savings account.

[ecoadapt]

Congrats for taking the first step in saving/investing! It's a long journey, and you have to start somewhere. I think for someone saving their first $250, the best option is to just save it in a savings account. You won't get much interest, but a saving account with some cash in it can keep you from going into debt whenever emergencies (car repair, doctor bill, etc) arise. And by NOT going into CC debt, you'll save by not paying 15-20% on credit card debt.

Definitely has point here. It's a good start for you,since you are new a savings account will do.

[Chart_oasis_man]

Hi, haidut!
If you can invest 250$ every year, you would have to reach an average annual return of 50% for 5 years to have the 5000$ (according to my calculations).
Everything with 50% annual return is very risky - there is a great chance that it will not work simply by investing. (It is like picking a stock at random that will be as good story as Apple in the past years.)
But there are other options, too. Investing combined with additional savings may help. Have you looked at the 'Money saving tips' section of this forum? You may find some good ideas that may help you to increase that 250$ saving per year.

You told you are from Bulgaria. I am from Hungary. If I can give you an advice: be very careful... There are lots of investments that are foredoomed to failure due to frauds or semi-legal things.

[kellogg9]

Greetings,
I found out about your website via google search and I want to ask some questions about investing.
I'm a student and I managed to save a small amount of money. About 250$ are sitting there in my piggy bank, so I was wondering if there is a way to make them work for me.Since I'm new to financing I'd appreciate your advices on how to increase those 250.
I appologise if this ism't the right place for this question.

Although it may be boring you might consider just tossing it into a high-interest savings account.

[FireBal989]

Congrats on your first savings :-) that's great that you saved some money and are already interested in investing and making it work for you. There's many great ways to save money and make it work for you, I would suggest at first maybe a high interest savings account, as others have suggested. In the future once you have more money you can look into various other investments and start multiplying and growing your savings, hopefully reaching your $5,000 goal or more in the next 5 years :-) Not having to support yourself right now is a huge plus and a huge benefit, you can focus on putting the money you earn where you want and making more, without having to think about spending it on things that you may need, best of luck to you and congrats on getting started and thinking about this early !!!!

[SMSF101]

It's good that you plan for your future. You can start a small business to manage your fund.