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Guess what? You can open a solo k. You won't get the free money from an employer, but you can still take advantage of those pre-tax contributions and tax-free growth. An individual retirement account IRA is a great way to go and can turn even small sums of money into a big nest egg over time. That's the power of compounding gains over time. Why an IRA?

In a word, taxes. With a traditional IRA , you gain similar benefits as with a k , reducing income taxes by cutting your taxable income each year you contribute while also growing your nest egg tax-free until you start taking distributions in retirement. One trap to be aware of is investing in penny stocks. Penny stocks are typically low-priced stocks of smaller or thinly traded companies. While it may seem logical that tiny companies or stocks that trade for just pennies per share or even less have the highest return potential, the reality is that the world of penny stocks is full of fraudulent companies and pump-and-dump schemes think The Wolf of Wall Street.

If you've been holding off with your investing, don't wait any longer. You'll be surprised at what a difference it will make in the long run. Discounted offers are only available to new members. Stock Advisor will renew at the then current list price. Average returns of all recommendations since inception. Cost basis and return based on previous market day close. Investing Best Accounts. Stock Market Basics. Stock Market. Industries to Invest In. Getting Started.

A year-old who learned to invest like Warren Buffett explains how saving can actually cost you money. Make It. The 3 smartest money moves young people can make today. Invest in You: Ready. Here are a few easy ways to get started: Sign up for your employer's k plan and take full advantage of any company match, which essentially gives you free money. Consider automated investing services known as robo-advisors that do the heavy lifting for you.

The process takes less than 15 minutes and can typically be done completely online. If you're on track for retirement or this money is earmarked for a different long-term goal, you can open a taxable brokerage account instead. This is an all-purpose account with no special tax breaks, which means the money can be used for any reason and there are no rules around how much you can contribute and when you can take withdrawals.

Check out our full list of the best online stock brokers for beginners. Limited time offer. Terms apply. Not so. If what you really want is someone to invest this money for you, you should know about robo-advisors. Robo-advisors will build an investment portfolio for you, based on information you share like your goals and risk tolerance. They're one of the best ways to invest a small amount of money. You'll pay a small management fee for the service, but that fee is typically a percentage of assets under management, which means the amount you pay is tied to your account balance.

Learn about robo-advisors. If you'd rather learn how to invest this money so you can DIY going forward, read on for the best strategies. Diversification is important because it spreads your investment around — when one investment goes down, another might go up, balancing things out. Enter exchange-traded funds. To change or withdraw your consent choices for Investopedia.

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Retirement Planning Retirement Savings Accounts. Key Takeaways Set aside a certain amount to save regularly. Look into savings apps that round up your purchases and save the small change. Pay off high-interest debts first. Take advantage of retirement plans. Think about the level of risk you are comfortable with and how that changes over time.

Trade up to better choices as your investment pot grows. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links. Related Terms Retirement Planning Retirement planning helps determine retirement income goals, risk tolerance, and the actions and decisions necessary to achieve those goals.