Accumulating and allocating investment money is a key part of your plan.

With your financial plan in hand, you can turn your attention to getting the cash together to make the first investment, and the next one, and the ones after that.

You don’t need much money to open an investment account. And once it’s opened you can add to it easily by having money directly deposited from your paycheck, transferred from your checking account, or by writing a check yourself.

You can also accumulate money in a savings account and plan to transfer lump sums to your investment account. But you should compare what you’d earn in the savings account with what you have the potential to earn by investing right from the start. You may find investing makes more sense for no more effort.

Investing at work

You may start investing in a retirement plan before you open a personal investment account. In that case, your employer has chosen a plan provider — often a mutual fund company — and you choose among investments available through the plan.

Investment accounts

To open an investment account with a brokerage firm, mutual fund company, or the brokerage arm of a bank or credit union, you meet in person with a registered representative — better known as a broker — or enroll online by clicking on the Open An Account tab and following the prompts.

Minimum opening deposit

You’ll want to investigate how much cash you’ll need to open an account and keep it active. Online accounts generally require modest minimums, such as $500, but may require $2,500 or more. Full service firms may offer several levels of interaction with investment professionals, with minimums ranging from $10,000 to $100,000.


When you invest you typically pay a commission or sales charge plus transaction costs. Commissions may be calculated as a percentage of the transaction or as a fixed amount per trade. Online firms are more likely to charge a fixed amount, ranging from $5 to $10.

Customer service

The more interaction you want with an investment professional, the more likely you may be to lean toward a brick and mortar firm. However, some, but not all, online firms offer extensive customer service as well, either online or over the phone.

Other factors

Other things you may want to investigate before you choose a firm are the types of investment products you can purchase, the availability of investment research or stock analysis software, and the fees that might apply in addition to commissions.

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Reinvesting your earnings

One of the most reliable ways to build your assets is to reinvest the money you earn on the investments you already have.

Dividends and interest from stocks and bonds are paid into your brokerage account, and you can ask your broker to reinvest them. With mutual funds, you can participate in a reinvestment plan, which means distributions are used to buy additional shares directly.

Making arrangements like these demonstrates why having an investment plan can make such a positive difference: If you know what you want to do next, you won’t end up holding earnings in cash for very long.

Purchase investments with the funds you accumulate

Choosing investments is always a challenge, and when you’re just getting started it may be intimidating. Many people start with mutual funds, in part because they’re the most common investment in a retirement savings plan. In addition, if you’re investing on your own, the initial cost of buying fund shares is relatively modest — often $1,500 to $3,000 and sometimes less — and you can add to your fund in increments of $100 or less.

If you compare costs, you can find a range of funds with extremely low annual fees, called expense ratios. The less you pay to own a fund, the more of your return you keep.

ETFs can also be attractive as initial investments, especially those that track the performance of a large number of individual stocks or bonds. Expense ratios are typically low, as they are with index mutual funds.

You might choose both stock and bond funds and ETFs or choose US Treasury bills and notes for the fixed income part of your portfolio. You can open an online TreasuryDirect account linked to your bank account to buy new issues or roll over your maturing ones. There’s no charge for purchases or holding the issues.

By reinvesting your earnings and adding new money regularly to your account, you can gradually expand your portfolio. Some investors stick to mutual funds, ETFs, and Treasurys. Others add individual securities as their account value increases. The choice is yours.

The accumulation phase

You can build an investment account from money you’re earning by adding a certain amount every paycheck or every month.

If you stick to the guideline of investing 10% of your annual salary, you’re talking about $250 a month if you’re earning $30,000 a year, and $1,042 a month if you’re earning $125,000 a year. You can find the monthly amount you’re aiming for by dividing your annual salary by 12 and multiplying by 10%.

If you don’t have a steady income, and you’re building your investment assets in bursts rather than in regular installments, there may be an added incentive for using a mutual fund account that puts your money directly into investments. But remember that these accounts do not assure you’ll have a profit or protect you from losses in a declining market.

In conclusion

A woman’s right to control money of her own has a long history, though in the past it rarely made her financially secure. In Europe, cash, commonly known as pin money, was allocated for a wife’s incidental expenses by a marriage contract. In the original Greek, the term was paraphernalia, or things outside the dowry. And in the United States, where dowries were not the norm, farm women traditionally controlled their butter and egg money, or what they earned selling the products they gathered or made.

How To Accumulate And Allocate Investment Money? by Inna Rosputnia

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