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For every month, saving $25 totals the amount to $300 in a year, excluding any interests. On an investment account, a fee of $40 sums up to more than 13.33% of the investment. Hence, the $25 investment will have to earn over $40 per year meaning a person will have to earn 27% return on their money if the account fee is taken out at the end of the year. There is a reason for earning 27% and not 13% which is that the money grows in a regular and even manner, the interest is earned on the amount of money that a person has in their account.

For example, let’s consider a person who invests $25 in a month then at the end of two months, they have invested $50 which goes further on. So, the principal on which the venture acquires interest grows as the account grows. The person has to consider if the fee charged counterbalances their investment. The most straightforward way of figuring out if the fee, charged is too high for the investment, is to compute how much money is required in profit earned to counterbalance the fees. For example, if a person invests $25 in a month, it makes up for $300 invested in a year- its 1% equals to $3. To compute the percentage of the amount that a person will have to earn in order to overcome the cost paid for the account, divide the fee charged by $3. If the amount of the investment (in a month) is different, then in order to calculate 1% of the investment- multiply the monthly investment by 12 and then divide the answer by 100.

Reduction in fees

The number of fees can be reduced if an investment account is set up with a mutual fund company. A person can save them the number of fees charged by financial advisors or brokerage firms and can contact the mutual fund companies directly via phone or their websites. This can be a helpful choice when the person does not have much money to manage at their end.

How investing $25 can help you

So investing $25 a month may help effectively in decreasing the person’s debt load, the amount of money (debt) that a company stores in its books. For example, let’s consider a person who can invest $25 in the small amount of money of their credit card bills that they pay to remain on the good terms with the credit card company. That $25 investment can charge a person about 12.9% of interest rate. This way, almost $3.23 are saved in a year for every $25 investment. The person will be capable of putting more money in too long-term investments when their debt is paid off, they will not have to worry about a small fee consuming all their profits because the money earned will more than just cover the fee charge.

Investing $25 in a saving account

Investing $25 in a month in a savings account, individual retirement account or mutual fund is a profitable measure; the most important point to cater at this point is to make sure that the profits earned offset the fees. Also, in order to invest higher amounts of money in the future, decreasing the credit card debt load or the amount of money owed on the mortgage.

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