5 Frugal Ways to Start Investing Now

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Investing in the stock market can be daunting to many. With a frugal mindset, you can get started down the road of investing in no time.

I was a bit lazy over the Thanksgiving weekend and just decided to recycle a post from my first days of Frugal Rules. So, it’s an oldie but a goodie.

You know the feeling. Your stomach is in knots, you can’t focus on anything productive and you’re uncertain about the future. No we’re not talking about your love life or the latest stomach bug that’s making its rounds, but investing in the stock market. Investing in the stock market can seem scary, but if you follow a few simple principles, you can avoid many of the pitfalls that ignorant investors fall prey to and invest in your future.

Do it Yourself


When you choose to live frugally, a common first step is to look for things that you can do yourself that you might otherwise pay someone else to handle. The fact that we have over 300,000 financial advisors  in the U.S. highlights the point that a lot of us like to pass on the managing of our investments to “experts.” This is an understandable need if you have a large portfolio or lack the time to actively manage the investing yourself. Money management isn’t free and quite often comes with a 1 – 1 ½ percent fee of your assets under management. Advisors, at times, can be compensated based off of what he/she directs you to, whether or not those products are in your best interests. You are the only money manager who has your best interests in mind 100% of the time.

Find a Broker


If you’ve chosen to manage your own investments, the best place to start is with one of the many online brokerages available. Each one has their selling points and ways to differentiate themselves from each other.  Many of the larger brokers now offer things like online bill pay and free check cards that can be linked to your non-retirement accounts to make life a bit easier.

With the hefty competition in the marketplace many brokerages offer incentives such as free trades or even cash to win your business. There is nothing better than free money to make a frugal person happy. If starting investing on your own overwhelms you, check out my Motif Investing review to see how they can make investing much simpler to manage.

Investing Begins With Education


Many brokerages offer free education to help you self-direct your investments. I highly recommend taking advantage of these tools as they can help you determine what kind of investment approach will best help you achieve your goals. Whether you want to go strictly into stocks, invest in low cost index funds or create more income, these educational offerings can help you get your bearings and get you started investing.

Set a Goal


Come up with an amount that you feel comfortable investing. If for example, you decide that you’d like to invest $1,000 then you can start with that. The nice thing about many of the brokerages out there is that they allow you to set up a free link between your brokerage and outside bank accounts to be able to move funds back and forth. So, if you decide to invest $1,000 and don’t have all of the funds now, you can move funds over on your selected time frame and accumulate the funds over time.

Investing in the stock market can be daunting to many. With a frugal mindset, you can get started down the road of investing in no time.

Leave Emotion at the Door


Investing in the stock market doesn’t have to be a gut-wrenching emotional experience. Yes, you will lose money, but you also stand an equal chance of making money. That is the nature of the market, it goes up and down. You’re human and thus emotional, but the challenge is to separate your emotions from your investments. We all do it, including myself, but the key is to not let your emotions dictate investment decisions and thus sidetrack your goals.

Investing in the stock market or anything for that matter takes time and research. Don’t let fear or lack of knowledge keep you from investing for your future.

What are some of the ways you got started investing in the market?



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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

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  • DC @ Young Adult Money says:

    I think the most frugal way to begin investing is the education option. Some people just do not have much money to invest, but it is never too early to start learning about the fundamentals of stock investing.

    • John says:

      I would tend to agree DC. Education is a huge thing that many simply don’t take an advantage of. There’s so much free education out there that it really is a shame more don’t take advantage of it.

    • Nurse Frugal says:

      I totally agree with DC! I feel like there is so much knowledge to gain about investments, it almost makes me want to go back to school to study that stuff.

  • Pauline says:

    I started because it was easy via a low fee broker and index funds. I sent a regular payment every month to average my buying cost and had just 4 index funds with no buying or exit fee. It is hard to keep your emotions in check so I forced myself not to check on it more than once a month for a net worth update.

    • John says:

      That sounds like a great start and going with index funds is a great idea. Great idea on only checking on it once a month. Personally speaking, that can be difficult to stick to.

  • Holly@ClubThrifty says:

    These are all great tips. I would also add to start saving small amounts and work from there. That is what we did. When we started saving for our kid’s college, we started with $25 per month! That isn’t a lot but it certainly got the ball rolling!!!

    • John says:

      Thanks for bringing that up Holly, I could not agree more. You have to start somewhere and it makes developing that discipline easier.

  • Roger @ The Chicago Financial Planner says:

    Good post, I especially like your point about leaving emotions at the door, this is a critical element to investment success in my opinion. I would suggest that you might also encourage readers to look at a fee-only financial advisor (full disclosure I am one and am very biased) vs. someone who works via commission and is little more than a peddler of financial products or (worse) fee-based (another, confusing form of the commission model). While there are certainly good, competent folks who earn some or all of their compensation from the sale of financial products, the potential conflicts of interest are huge.

    • John says:

      Thanks Roger. Keeping those emotions at bay is vital, otherwise you’re bound to make mistakes. And yes, I am generally a big proponent of using a fee only advisor.

  • Catherine says:

    I need to learn so much about investing. My lack of knowledge is embarrassing. On my to-do list is to borrow books from the library to educate myself. I know a little- we have a registered savings plan for our daughter’s education but I really only understand the basics :S About your post specifically…emotions and money never mix well!

    • John says:

      I hear you Catherine, but it does not have to be. A lot of people are in that same situation and the key is knowing where to look to find good resources. Going the library route is a good idea and there’s a wealth of information available on line. If you ever have any questions on resources, feel free to shoot me an email and I’d be more than happy to help.

  • Liquid says:

    I got started by just watching business news and reading financial websites. Some of it can be boring, but if you look past the numbers and analysis you can see the story behind each article and understand why companies invest the way they do, or why investors choose one type of stocks over another. Investing for me soon became a lifestyle because it’s not just about learning about money, it’s about learning how the world works around us 😀

    • John says:

      That’s a great way to get started, I did much of the same when I started. Great point about learning how the world works and implementing that in your investing. I, personally, want to know how my money is working and what it’s doing so find out as much as I can.

  • Jennifer Lynn @ Broke-Ass Mommy says:

    I believe it is *much easier* to separate emotions from investing when you are actively involved with selecting certain assets or companies you believe in (and have determined to be undervalued). Then ‘down days’ won’t send you reeling into a panic. Instead you’ll wisely buy further ‘cheaper’ shares in order to take advantage of such dips!

    • John says:

      That’s a great point Jennifer! It’s much easier to have that separation when you’re confident in what you’ve selected and will help you not run for the hills like everyone else.

  • Grayson @ Debt RoundUp says:

    Great oldie John. I think investing scares people and that is due to lack of investment education. There are many ways to start investing. I started with Betterment, but am going to be moving to a Vanguard fund once it reach the minimum investment criteria.

    • John says:

      Thanks Grayson. I could not agree more, a huge part of it does come down to education. I think that’s what really helps level the playing field and can help you get farther ahead.

  • Veronica Hill says:

    Education is definitely a must. I’m new to investing and have been reading the Intelligent investor. There is a blogger who has some pretty good analysis called Brick by Brick Investing. OneMint is another good one for those interested in investing. Nice post John!

    • John says:

      I totally agree Veronica. I know you’ve mentioned reading that book before and that can be a great start. I go to Marvin’s site regularly and agree that he gives some pretty good analysis. I’ve not heard of OneMint, so I’ll have to check it out.

  • Jason says:

    lol. I need to recycle some posts! I don’t even know how to do that!

    The best thing to do is just start putting a tiny percentage in your 401(k). It’s unlikely you’ll even notice the change (especially if you just start out at 1%) and you’ll eventually learn by experience…assuming you take some time to educate yourself a little.

    • John says:

      It’s pretty easy and by the end of the week last week I just did not have it in me to write.

      That’s a great point Jason. Many times you don’t feel that amount going into the 401k, especially as it lowers your taxable amount. It’s better to start with something as opposed to nothing.

  • Canadian Budget Binder says:

    Great Post John,
    I’m learning about investing but am also putting money away in RRSP’s ,Pension and TFSA’s both of which I hope to ramp up in the New Year. I really want to learn more about investing on my own but I know it will take time. I also agree that putting something away even if it is small amounts is better than nothing at all. Great tips. Mr.CBB

    • John says:

      Thanks Mr. CBB! Learning more about investing does take time and there are many resources out there available. Putting that money away is the first step to take, the rest will come if you allow it.

  • Kim@Eyesonthedollar says:

    I love the recycling idea from when you had no readers. It just seemed like such a waste of a good post when the poor thing sat out there with no comments or tweets. I’ll have to consider that idea. I like the goal idea. You can set up a money market fund with very little and start there and put it into an IRA or whatver you choose when you get to the minimum amount allowed.

    • John says:

      I know. I felt the same way and I REALLY did not want to write at the end of last week, so it was a no brainer. Those are some great points Kim, I’ve done that in the past to help get started with investing.

  • Jon says:

    We started by finding out our risk tolerance (there are lots of quick surveys online) and matched that up with a mutual fund that came with low fees (we had to do a bit of research to figure out MERs and such). Now we buy more of the same fund every month (dollar cost averaging) and reinvest the dividends.

    The other investment we have is with Lululemon – my girlfriend worked there for a while and so we started with their company matching contributions scheme. We got up high enough to be able to sell off our initial investment and now we’re just watching what happens with the excess profit…. Still learning/researching about new stocks to invest in now.

    • John says:

      Sounds like you’ve taken some very solid steps Jon, and dollar cost averaging is great! LULU has definitely had some good growth over the last few years, and then they did their split recently, so I’ll be interested to see how far they go.

  • Justin@TheFrugalPath says:

    Information is key when it comes to money. It’s amazing how many people think that the markets are rigged, and perhaps they’re not 100% fair to the average person. However, that doesn’t mean you don’t have advantages as a single investor. Reading books can be a great way to learn about investing.
    I tend to stick to index funds. They’re easier to manage and it’s kind of like diversification without as much research.

    • John says:

      I could not agree more on information being key Justin. I always have to sigh internally when I speak with someone who is making uninformed financial decisions and running with gusto towards that. Index funds are great, especially if you’re short on time.

  • Todd @ Fearless Men says:

    If anything, leaving emotion at the door is the most critical thing to do. I’ve made mistakes pulling the trigger on the way in or out b/c of emotion. Maybe you could even right a post on how to manage emotions regarding investing? People told me on the way in to investing it would be a problem. I didn’t believe them. But when I got there, it was a challenge.

    • John says:

      I would tend to agree Todd. Emotion is a powerful thing and can lead you to doing some unwise things when it comes to investments. I actually did do a post, my first week I believe, on emotions and investing. I just may have to “recycle” that one as well. 🙂

  • Cat says:

    I did it the traditional way – mutual funds. Sigh. Fees and a good chunk of them tanked. I’m slowly learning as I get older..

    • John says:

      I hear you, I’ve done the same thing. The important thing is learning from that. It’s a gradual process and we all take time to learn.

  • Mackenzie says:

    I know very little about investing, but one of my goals for next year is to learn more about it. I admit, investing has always kind of intimidated me.

    • John says:

      I can understand that intimidation, a lot of people feel that way. That’s why education is vital and so much of it is free and readily available.

  • Glen @ Monster Piggy Bank says:

    Best tip ever – Leave Emotion at the Door – It took me a while to learn this, but the minute I did my investments in the market actually started to make money.

    • John says:

      I totally agree Glen. It can be an easy, but important lesson to learn. In the end you have to do what’s right for you and not follow what every one else is doing.

  • Marie at Familymoneyvalues says:

    Also, design an appropriate asset allocation model for yourself depending on your investment goals.

  • Paul @ The Frugal Toad says:

    The most important thing is to start as early as possible and to invest monthly on a dollar cost average basis. A low fee target growth fund is a great way to start for investors new to the market.

    • John says:

      I totally agree Paul. A lot of people forget the time aspect and it’s one that is key to becoming a successful investor.

  • Marissa says:

    Its the long time investments that really pay off well! Investments should really be mandatory for young people!

    • John says:

      I agree Marissa! The earlier you start the better as time is one of the most overlooked things when it comes to investing.

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