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Infographic: Invest in the Stock Market With Just $5 a Day
How to Invest in the Stock Market With Just $5 a Day
90% of investors use complex charts, hot stocks, or crypto – and fail miserably.
But not you! Iโll share the $5/day strategy that beats 90% of investors – it takes just 5 minutes to set up.
The $5 a Day Strategy
With the $5 a day strategy, you invest this amount every single day. Thereโs no need to think, which means no market analysis or emotional decisions.
Let’s talk real numbers. If you start when youโre 20, this strategy of investing just $5 a day results in over $2 million by the time you retire!
So what do you actually do? You set up automatic investment so $5 goes into shares every single day, whether the marketโs up, down, or sideways.
When prices drop, your $5 buys more shares. When prices rise, your $5 buys fewer shares.
So over time, you automatically buy more shares at lower prices and fewer shares at higher prices, which reduces your average cost per share.
The psychological advantage is huge. When the market crashes and your coworkers are panicking, youโre secretly happy because your daily $5 is buying shares on sale.
When the market soars and everyone’s bragging about their gains, youโre still buying shares, just fewer of them. You completely take the emotion out of investing.
Yes, this strategy, called dollar cost averaging, is boring. But thatโs exactly why it works!
Setting Up Your $5 Daily System
Hereโs how to actually implement this strategy.
Step one: choose a low-cost brokerage. Fidelity, Schwab, and Vanguard all offer zero-fee trades, low-cost index funds, and fractional shares.
Step two: set up automatic daily transfers from your checking account to your investment account. If you want, you can set up weekly or monthly transfers instead.
Step three: select a broad market index fund with a low expense ratio. For example, VTI tracks the entire U.S. stock market, and SPY tracks the S&P 500.
Both are excellent choices that give you instant diversification across hundreds of companies.
Step four: enable automatic investing. This means your daily $5 automatically buys shares of your chosen fund.
Step five: Adopt the โset it and forget itโ mindset. Check your account once per year at the most, and resist the urge to adjust investments based on where the market is.
The more you mess with it, the worse your returns will be.
As your income grows, you can increase your daily investment amount. Lifestyle inflation usually makes us spend more on useless stuff anyway. Redirect that money to your future wealth instead.