The power of starting small and investing consistently

Successful investing doesn't have to involve large sums of cash. Shelby Clark, executive director at GPS Investment Fund, looks at investments that let you start small and keep growing.

How much money would you say it takes to start investing?

It's a question that stumps plenty of Australians.

Research consistently shows misconceptions around the amount of cash needed to get the ball rolling as an investor.

It turns out plenty of people assume you need at least $1000. Others say $10,000.

It's true, there are investments and investment platforms that may ask for high minimum starting balances.

But the reality is that you can start investing with as little as $1.

Let's face it, $1 doesn't buy much these days: maybe half a litre of petrol or one-fifth of a cappuccino.

So, it's pretty exciting that a single dollar can let you become an investor in Australia's growing private credit market (essentially non-bank lending) - and earn a healthy variable return of 6.50% p.a, with the likes of GPS Investments' Arkus Fund.

Starting small - a chance to test the waters

Not everyone starts small because cash is tight.

When I talk to Arkus Fund investors, it's clear that many start out with as little as $1 for reasons that have nothing to do with a lack of funds.

The fact is, starting small can be an opportunity to 'try before you buy'.

It's a way of dipping your toe in a particular asset market, or to test the investment provider's credentials and see if they live up to their promises: Are distributions paid as and when described? Does the return match - or exceed - the advertised figure? If investors have a question, can they contact the investment provider and speak to a real person here in Australia or do they have to deal with a bot?

This approach explains the pattern I've seen among many Arkus Fund investors. They start small, gain confidence in the private credit market, and from there consistently add to their investment in a pattern that builds wealth over time.

The importance of staying consistent

Success as an investor is not just about getting started. It also involves consistently adding to your investments.

Here too, regular investing doesn't have to involve substantial sums of money. Every bit counts, and that's especially important in these high-cost-of-living days, when many of us simply don't have a lot left over once regular bills have been paid.

What matters is getting into the habit of regular investing. It's great discipline, it lets you harness the power of compounding returns, and it's a sure-and-steady way to grow wealth.

Taking a little-and-often approach to investing isn't just easier on our personal cash flow. It can also provide the feel-good factor of knowing we're doing something positive for ourselves - and our financial wellbeing, even during difficult times.

Look for zero-fee options - they do exist

If you do plan to start small, it's important to be mindful of investment fees.

As I mentioned, the Arkus Fund offers a way to start investing with just one dollar. There are other options too, notably micro-investing apps, that let you start small.

But do keep an eye on the fees you'll pay.

Micro-investing apps such as Raiz can charge fees as high as $5.50 per month. While this may be low in dollar terms, it can work out to a significant percentage of your account balance if you have only limited funds invested.

The good news is that it is possible to avoid fees altogether.

As a guide, the Arkus Fund charges zero fees. There's no trick to this. The fund invests in registered first mortgages over residential construction projects in south-east Queensland. Just like getting a loan from a bank, the borrowers behind these mortgages pay fees when they take out a loan. So Arkus investors pay zero fees.

Small steps - big strides

As with most things, the key to investing is taking that first step.

So often we wait for the right moment - when we'll have more money, more confidence and more time.

However, the cost of doing nothing is real.

Today's high inflation is eating away at the purchasing power of cash sitting in low-interest (or worse, no-interest) accounts. Beyond missed returns, the emotional toll of feeling as though you're falling behind financially shouldn't be underestimated.

That's where the Arkus Fund comes in. With the upside of regular income, above-inflation returns, and zero fees, it's a chance to embrace the power of modest beginnings and grow your balance at a pace that suits you.

The Arkus Fund (ARSN: 686 375 422) ("the Fund") Product Disclosure Statement ("PDS") is issued by GPS Investment Fund Limited (ABN: 40 145 378 383) (AFSL: 383080) ("GPS"). This document may contain general advice which does not consider any particular person's objectives, financial situation or needs. GPS is not licensed to provide financial product advice about the Fund, so you should obtain a PDS, including a Target Market Determination ("TMD"), and read both prior to making a decision to invest. The PDS and TMD for the Fund are available at www.gpsinvest.com.au/resources/, or by calling 1800 999 109, and the TMD includes a description of who the Fund is considered appropriate for. You should also consider obtaining professional financial advice before making an investment decision. Cooling-off periods do not apply to the Fund. Past performance is not a reliable indicator of future performance. An investment in the Fund has risk, can fluctuate in value, may achieve lower than expected returns, is not a bank deposit, is not guaranteed and investors risk losing some or all of their principal investment. Distributions, if any, will generally be paid monthly. The Fund has limited withdrawal rights. Withdrawal offers will generally be made monthly, subject to available liquidity. Refer to the relevant PDS for more details.

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