Investing is a powerful way to grow your wealth, but many people think it’s out of reach due to high costs and a lack of funds. Fortunately, there are many ways to start investing with little money, from budgeting and using employer-sponsored retirement plans to micro-investing and dividend-paying stocks.
Create a Budget
Even if you only have a small amount of money to start with, you can still begin investing. Creating an investment budget will help you to identify when and where you can invest, and with how much money. If you take it a step further and do a complete budget for your household bills and living expenses, you may find you have more money to invest than you thought. Sit down and do a little budgeting before you begin investing so that you know just how much you have to play with, and never invest money that you cannot afford to lose.
Look for Growth Opportunities
Having just a few dollars to invest doesn’t mean you cannot make some serious money over time. Some of the world’s largest companies began as very small businesses offering stock for just a few dollars or less. Now they have a market cap in the billions. Take a close look at any stock currently under $1.00, often called penny stocks, to try and find a business that will grow in the long run. This is often called ‘getting in on the ground floor’, which means buying into a company before it hits the big time, and it can yield huge returns on small investments. The bigger the potential return, the bigger the potential risk. Always be careful when choosing penny stocks.
This style of investing is becoming incredibly popular, especially with investors that are starting out with only a small amount of money. Micro-investing apps and websites allow you to invest small sums in big businesses by buying only a portion of a share. Tesla, for example, is currently trading between $150 and $200 so you may not be able to buy a full share. Micro-investing services allow you to buy a portion of a full share for less, and they have reduced fees too, so you get more value for money when they use them. Using an app makes it easy to follow your investments and you can receive notifications when there are changes in the market or an asset you are interested in drops in price.
Outsource Your Research
An emerging investment strategy is using Artificial Intelligence (AI) to manage your portfolio. This is great for small-scale investors who do not have a lot of money or time to invest. These ‘Robo-Advisors’ use sophisticated algorithms to create and manage your investment portfolio, including buying and selling stocks and other assets. The returns can be quite consistent, and you can give the AI instructions and your investment objectives and it will form a strategy based on your inputs. This gives you a hands-off portfolio that you only need to manage casually yet you can still achieve returns on your investments.
Play It Safe with Employer Retirement Plans
If you are in full-time employment, there is a good chance your employer offers a retirement investment plan such as a 401(k). Though you have less control or influence on your investment, it is carefully managed by an experienced and accredited investment manager and uses ‘blue chip’ stocks and safe investments to help build your nest egg for retirement. You can add small or large amounts to this fund and in time it will yield a sizeable return that will help you to enjoy your later years in financial security. Speak to your employer or HR manager about your company’s retirement plan.
Investing with little money may seem daunting, but it’s possible to start building your wealth and securing your financial future. By taking advantage of low-cost investment options and following sound investment strategies, you can grow your portfolio and achieve your long-term financial goals.