10 Ways to Start Investing With Little Money
When you mention the word ‘investment’ to some people, their minds quickly rush to men in suit, working in the stock exchange. However, real people understand that investing even a very small amount can lead to a leap to their financial power. You don’t need to be a billionaire before investing your money.
You do not need to have an office in Wall Street before you can invest. Even with as little as $1 dollar, you can start investing. The main thing is that you are taking an action. Do you know the basic requirement of building wealth? With just good spending and investment habits, you can become a wealthy man before you could know it. One of the ways to achieve this is by putting away a few dollars each month and trying hard not to withdraw from it.
With your smartphone, anything is possible, including investment. With a savings account, you can send your money on an errand while you focus on other areas of your life. Investment comes in different forms, just like we have different costumes for different occasions. This means that there are countless available options for investment, what you just need is to locate the one that just fits your financial plan.
Without much ado, the following approaches are available for you to send your money to work.
- The cookie jar approach – investing with little money
For you to invest money, you need to save up some considerable amount of money. If savings is one of your weaknesses, you can start by putting away little per week. It could be more or less, depending on your financial capabilities. You can use a saving box or open a separate bank account for it. Anyhow, stash some money away in a safe place and live a bit less than you earn.
Alternatively, you can join an online savings where you save some amount of money online and withdraw on maturity. Start with a little amount and increase as you go.
- Invest in the stock market
Before, money used to be a barrier to investing in the stock market. But not anymore. The emergence of internet and smartphones has made everything easy and accessible now. You can now get started with little money, then, increase as you get acquainted with the system. Interesting, right?
There are a lot options available for you and you could even start with as little as $1. That is how easy it is.
In the past, investors charge some commissions to invest your money for you. But the brick wall has been shattered now. You can invest with no commission. Another good thing brought by the internet! You can invest in companies that have fractional shares. This means that you can invest your money by buying a fraction of a full share. with $370, you can invest in high-priced stock like Apple. Other apps include Public, Robinhood, and so on.
- Try out the real estate market
Real estate used to involve a huge amount of money, but not anymore. There is a kind of real estate investment that is called ‘real estate crowdfunding’. With this, you can own fractional shares of large commercial properties without having to be a landlord. You and other investors pool your money and purchase some real estate. This makes you a partial owner of the property. Any profit accrued from the sale of the property or its rent, depending on the case, is shared based on your percentage input.
With crowdfunding, you might put in a little more money like say, $500. It involves higher risk because you have to put all your eggs in one basket. So, instead of diversified investment, all your money goes into one property. That is not all, you will be required to pay a certain amount of money that you would not have paid assuming you bought the property yourself. Do you think the risk is so high? Nah! you will share the risk with other investors and do not have to do any paperwork for you to own a property. An online platform called ‘Fundraise’ offers you such an opportunity and you can start with as low as $500. You will only pay a fee of $1 and you are offered a 90-day guarantee. Fundraise is one of the numerous platforms out there.
- You can Enroll in a Retirement Plan
There are some employer-sponsored retirement plans that you can invest in if you are on a tight budget. The good news here is that you can start with a very minimal amount – as little as %1 of your salary. As you keep earning, you can increase your initial investment plan. It is called a 401(k) investment plan. Many of such investment plans invest in mutual funds and help your money grow as you earn. Assuming your employer does not have a 401(k) plan, you can invest your money in an Individual Retirement Account (IRA), provided by banks of stockbrokers.
- Robo-Advisors are advisable
To acquire an investment manager comes with its own challenges – money is required. This means that for you to invest your money, you will also need to pay some commission to some individuals to guide you right. Well, that seems to be an action in the past. Nowadays, the cost is no longer an issue. You do not need to spend so much on just an investment manager. Robo-Advisors like Betterment can take care of that for you if you allow it to. With just as low as 0.25% annually, you can invest your money. This means that for an investment of, say, 200,000 naira, you can pay the Robo-Advisor a fee of 500 naira per year. Isn’t it amazing? You can even invest as low as $100. So, what are you waiting for?
- Consider Certificates of Deposit (CDs)
This option works just like savings accounts; though it attracts a higher interest rate if you leave your money for a period of time called ‘term’. The term could be as low as 3 months and as high as 5 years. Interestingly, a higher term attracts a higher interest rate. You must wait for the maturity of the stipulated term, else, you’ll have to pay a fee and lose your earnings from the interest.
Sadly too, much lower returns are offered by CDs than other investment plans. But then, the risk involved is quite low. There could be no risk too if the bank is FDIC-insured.
- What about Peer to Peer (P2P) Lending?
I am certain you’ve not heard about it before. It is a very interesting way of investing in your fund. Care to know how it works?
It is quite simple! You lend your money to someone else as a form of investing the money and the person is expected to pay back with some interests. Isn’t it risky?” you may ask. It is. However, you can choose to start with as low as $25 and increase it as you get more familiar with it. You could also divide your money among different borrowers. This is a smart way of lowering the risk involved in the investment. Lending Club and Prosper are two platforms that are experts in this kind of investment.
- Secure your Money in Treasury Security
Treasury security is not a good option if you are looking for a lucrative investment plan. However, it has a lower risk than many other investment plans. Through U.S. Treasury’s online savings bond portal, you can purchase your savings bond. The maturity period can stretch between 30 days and 30 years. What is more interesting than investing as low as $100. Robo-Advisors can also help you with this kind of investment.
- Gold and Other Precious Metals
How do you see investing your money in gold? Do you doubt its feasibility? Doubt no more. Investing in gold and other precious metals is a good way of putting your money at work. These metals appreciate with time and you can sell off whenever you wish to. Currently, the price of gold has appreciated by about 300% in the past 3 decades.
It is risky to invest in gold, just like every other investment has its downside. The increase in demand happens with instability in the market. Through your brokerage, you can buy gold. However, the option is yours.
- Obtain a Savings Account
If you are scared to put out your money in some investment plans that you are not 100% guaranteed of the safety of your money, you can consider stashing your money away in a savings account. While considering that, you have to understand that a savings account may not yield much interest for you. Saving your money is a kind of investment with a little return. Instead of wasting your change and not be able to account for it, you can save it in the bank. The more you put money in there, the higher your account balance grows. Before you could know it, you have been able to save a lot of money and extra with the interest.
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Why Should You Invest Your Money?
There are several reasons for investing your money and one of them is because it helps you to grow financially. With the investment, you can earn another stream of income by stacking away part of your income. The moment you start investing part of your income, you will agree with me that it helps to build confidence in you. You know for sure that there is always something to fall back to, in case of any financial bump in the future.
Over time, you could even start off your own business from the money earned through investment. It requires time and patience, no doubt about it, but in the long run, you will be glad you started.
You don’t need an enormous amount of money to start. You could start off with as low as $1. As you earn higher, you could increase it. Some people do not invest because of the risks involved in investing. But don’t you think it is riskier not to invest at all? What happens when you are faced with an emergency and you do not have any kind of money to clear the debt? What if you will have to work for your money all your life, when will you get to enjoy it?
You can see that the earlier you start investing your money, the better for you. With the simple strategies we compiled for you, you don’t have to wait till you have some extra millions in your account before you can invest your money. The right time to invest your money is now.