It’s common to believe that there’s no point in investing unless you have a lot of money available to work with, but that’s not true at all.

It IS possible to successfully invest small amounts of money, especially if you can commit to doing so on a regular basis. In fact, that’s one way that small amounts can eventually become large amounts.

How quickly can you invest?

How quickly can you invest just a small amount of money? Well, it depends on what you want to invest in. If you’re interested in real estate and you have $25 per month to invest, it’s going to be a very long time before you can buy some property. But if you want to invest in stocks, bonds, and mutual funds, you can do so fairly easily.

What to keep in mind

There are a few things to pay special attention to when investing small amounts in stocks, bonds, or mutual funds. (They’re also good things to pay attention to regardless of the amount you have to invest.)

Fees are probably the most critical thing to be mindful of, especially trading commissions and annual fees. Those can quickly eat away at your investment amount if you aren’t careful. Investigate exactly what you’ll be charged for each trade and what other associated fees might be involved. Many brokerage firms offer more than one pricing structure, and they usually charge different rates depending on whether you do the trades online, over the phone, or using a broker.

Remember, “investing” doesn’t necessarily mean “outside of a retirement account”. You can do so within your Roth, 401k, or other type of retirement account. Those can give you tax advantages too. I maximize investing within tax-advantaged accounts first.

Reducing fees

There are strategies to reduce the fees you’ll pay when you have a small amount of money to invest regularly. You can trade less frequently (by saving up until you have a larger amount), sign up for automatic investment plans (either via brokerage firms or using DRIPs), or choose no-load mutual funds or funds with very low fees.

You can use fund screeners like Morningstar’s to search for no load funds or low-fee funds. Vanguard funds are also known for having low fees, but they often have relatively high minimum initial investment amounts, so you may need to save up for a while if you want to invest in one of their funds. You can also buy Treasury bonds, notes, and bills with minimum purchase amounts ranging from $25 to $100.

Don’t bet on a single horse

Diversification is another issue that’s harder to deal with when you only have a small amount to invest each month, but it can be handled. You just have to be hyper aware of it.

Be sure that you don’t strictly buy shares of one single company, or invest only in a single industry or category. Spread things out so that you don’t put all of your eggs in one basket. It’ll take you longer to do so if you’re buying single stocks, but it can be done. Diversification in this case is probably easier to accomplish with mutual funds.

The bottom line though is not to be discouraged if you only have a small amount of money to invest each month. It can be done. And given time, consistency, and smart choices, small amounts can become large amounts.

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For many people who want to start a side business, the goal is to do something quick and easy that’s going to bring in money without then having to expend too much effort. And who wouldn’t want that? I’d like to have money magically roll in too

But let’s talk reality

The thing is, that’s not realistic — at least not at first, and sometimes not ever (depending on what type of business you start.) This means that while there are all kinds of claims out there when it comes to starting a side business that might make you think otherwise, real rewards follow real work.

Yes, you can make money using passive income ideas. But no matter what, starting something like that still involves an investment of time and energy. All side businesses do.

Things to consider

So if you’re considering starting a small business to bring in some extra money. take some time to make sure it’s likely to be a good fit. Talk to other people who are doing something similar themselves to learn about their experience. I don’t mean the people offering to sell you such a business or related materials/training, I mean people who are actually earning their money from the type of business you’re interested in.

Think what you would most enjoy about the potential side business you have in mind, too. Other than the money, that is.

Remember…

Unless you’re only going to be doing it for a couple of months, a side business will be a big part of your life. Making sure it’s something that you will both enjoy and be good at will increase your chances of success.

Recognizing that even a side business takes time and effort will too.

Once you’ve got a good understanding of what will be involved, you’ll be ready to get started — and better prepared for success. So give yourself that good foundation, and then get started.

Thinking of starting a side business but don’t have an idea nailed down yet? Check out 101 Ways to Make Extra Money in Your Spare Time.

Here’s the deal: I’m looking to spend about $75K max on real estate, so that puts me squarely in the range of condo or major foreclosure deal.

Condo pros & cons

The number one pro for a condo in the Phoenix area, of course, is that I might even be able to afford two of them. If I went the condo route, I could rent them out and generate a monthly income from them. That income (less expenses) would then be considered earnings for my self-directed real estate IRA, so that’s a big plus there.

Cons would be: Monthly HOA fees and possible assessments – especially if I bought in a complex with a lot of foreclosures. Resale to non-investors could be an issue too, since typically the condo complexes here have a huge percentage of renters, which makes them ineligible for some kinds of loans. And of course, I’d have to keep it rented to good renters who pay on time.

House pros and cons

I see needing to find a house that’s a bargain as a pro, especially if it’s one that just needs curb appeal and some cosmetic repairs (paint, flooring, maybe appliances). Taking something that isn’t move-in ready and freshening it up really appeals to me. The other huge pro is that I could avoid an HOA if I buy a pre-80s home.

Cons are that I’m not sure I’d want to rent out a house, so this would be more of a flip situation. Except that since it’d be in my IRA, I wouldn’t be able to do any of the work myself. I really enjoy working on houses, so that’s a downside.

Other considerations

The other things I need to consider all relate to it being in my IRA. Because of that, I’ve got to remain below the $5500 IRA contribution limit each year. (Less for 2013 in my case, since I’ve already contributed some money to my Roth.) That means that any major repairs or assessments beyond that amount will need to come from cash reserves in the IRA. I’ve got to he a reasonably good predictor of possible annual expenses. Taxes and insurance are a given, but other things could be up on the air.

Decisions, decisions

So I’m pretty conflicted on all of this. If HOAs and their fees weren’t involved, a condo (or two) would be the easy choice. If it weren’t in my IRA, a flip where I do a bunch of work myself would be the winner. But in my actual situation? I don’t know. Maybe it will come down to what’s even on the market in the area. I guess time will tell.

Meanwhile, here’s your chance to chime in. What would you do, if you were me? Is there anything I’m overlooking?

While there are plenty of mistakes that can be made during the process of buying a home, there’s one big mistake that many people make — often without even realizing it — after the purchase is complete.

First-time homebuyers are especially prone to this mistake, but experienced homebuyers aren’t off the hook either.

What is it?

It’s deceptively simple: going overboard on related purchases, while forgetting to take total costs and available funds into account.

You see, when you buy a house, your existing furniture may not fill it up, or even fit. You may need or want to replace all kinds of things — everything from light bulbs to fixtures that aren’t your style. Painting and new wall decor are often on the list too, along with things like new or updated landscaping.

If you’ve always lived in an apartment, you may need tools that you’ve never required before. Then there are ongoing expenses like increased utility costs, taxes, insurance, and other fees. And repairs…

Those things can cost a small fortune — a fortune that you may not have been adequately prepared to spend.

Avoid the hit to your wallet

To avoid a big hit to your wallet like that, plan ahead before you buy to be sure you’ll have enough for a few “must do” items, and then exercise restraint on the rest.

Don’t spend your time looking at Pinterest or the glossy magazines that will arrive in your mailbox if all they do is make you want to go out and spend money you don’t have.

While you may want to fill up empty rooms or rip out nasty wallpaper from the 70s right away, you’ll be better off — and less stressed — by waiting for the right time to do so financially.

Your house doesn’t have to be perfect

Your friends and relatives won’t think less of you if your house isn’t perfect right off the bat. No one’s is. In fact, they’ll probably think it’s smart of you not to rush into things and to take your time. Don’t let advertisements like “no interest for 12 months” tempt you into doing things you’re likely to regret later.

A new house is an enormous financial step, so take the time you need to be sure it doesn’t become a millstone around your neck instead of a home you can enjoy.

Are you sabotaging yourself? Maybe there’s something you really want to accomplish, but you’re constantly struggling with it. You don’t have enough time, or something always comes up that you need to spend money on instead, or you just can’t seem to get it done.

If any of that sounds familiar, chances are you’ve fallen into a pattern that sabotages your efforts.

Here’s an example

Suppose your goal is to curb impulse purchases. You do really well for a few weeks by only buying the things that are on your list.

But then one day you need to pick up something that’s near the mall. Before you know it, you’ve stopped in at the mall and bought several things that you didn’t originally intend to buy.

So you berate yourself for your lack of self-control, and give up on the goal for a while. Why keep trying if you’re not going to succeed, right? Maybe you even buy more.

A few months later, you find yourself newly motivated to try again — maybe by a New Year’s resolution or an unexpectedly large credit card bill that acts like a kick in the rear.

When the try/give up/try again later thing happens repeatedly, you’ve fallen into a pattern that’s preventing you from reaching your goal.

Why you might be sabotaging yourself — and how to stop

There are generally three major reasons we sabotage ourselves:

1. You don’t really want to reach your goal, deep down. This can happen when the goal is just something you think you “should” be doing, or it can happen when you’re afraid of success. If this is the case, give yourself permission to either stop trying, or else figure out why you don’t want to reach the goal. Sometimes there’s an underlying assumption about what things will be like once you’ve reached the goal that’s unappealing, and that’s really what you’re trying to avoid. (Such as “if I’m responsible with money, I won’t ever get to do anything fun.” — but in reality being responsible with money allows you to enjoy MORE fun things.)

2. Your goal is unrealistic. If your goal is unrealistic — such as “I will never eat another unplanned meal out”, the moment you eat a single unplanned meal out, you’ve failed completely. Switch to something more realistic, and you’ll succeed. An more realistic goal might be, “I will eat three home-cooked meals a week.” Once you’re used to doing that on a regular basis, you can increase the number of home-cooked meals until your eating out is at a comfortable level.

3. You’re not paying attention. This one’s insidious, but it’s also fairly easy to solve once you realize that the issue is a lack of attention. Sometimes we just get sidetracked, or busy, or we have too many goals that we’re trying to reach at once. If you have a goal that’s important to you (and it probably is if it keeps coming up) write it down and read it aloud to yourself each morning. Reminding yourself daily of the goal will help. Tracking your progress and celebrating each successful step toward the goal will help even more.

Finally, it helps to remember that you’re human. We’re all going to mess up now and then, and it doesn’t mean that we’ve failed or that we should give up. It means that we messed up, but can go right back to working on what we want to achieve.