Investing is a great way to plan ahead for your future, both in a literal and financial way. Most people think that you need to start off with a large amount of money to get into investing.
However, you don’t have to have big bucks to be a successful investor. Investing when you’re trying to make ends meet is hard, but not impossible. If you’re looking to get started in the investment business, but don’t have much of a startup budget, you’ve come to the right place!
Here are 7 useful tips for smart investing on a small budget.
1. Deal with your debt
The first rule of smart investing is to go into it without existing debt. Before you start saving, analyze and deal with what is already causing you to lose money. See how you could go about discharging these costs as quickly as possible.
If you’re getting into the world of investing, chances are, whatever money you get back will not be enough to cover the costs of your current debt. While you can’t predict exactly what returns you’ll get on your investment, it’s better to be on the safe side and start with a clean slate.
2. Start small in the stock market
Most people think that to get into the stock market, you need billions and billions of dollars. Contrary to popular belief, you can start much smaller in the stock market and still get something out of it. There are plenty of legitimate, profitable stocks out there for you to invest in with a starting budget under 100 dollars.
From stocks under 50 dollars to stocks under 2 dollars, there are plenty of ways to dip your toes into the stock market. All it takes is a little research and optimism, so start small and work your way up.
3. The cookie jar method
Investing in your future sometimes means saving money in your present. If you can’t afford to get into savings accounts with a lot of money, you can try the old-fashioned “cookie jar” method. This approach is a simple, easy, and painless way to start putting some money away.
At the end of each week or month, set aside small amounts of cash. Out of sight, out of mind, until you’ve collected enough to start investing. Investing and saving go hand in hand if you want to be smart with your money while on a budget.
4. Automate your savings
While on the topic of saving, a great way to do that is to automate your savings. The dedication to constantly set aside money can be a task difficult to handle for most people. If you lack willpower, and if you can help it, try automating your savings with smartphone or computer apps.
The best apps for the job are ones that round up your purchases to a whole number and transfer the difference into a savings account. This can help ease some of the pressure while you passively save money in the background.
5. Think about your retirement
Sometimes the key to smart investing is a combination of finding the right motivation and using the right resources. The main goal of investing and saving for most people is to ensure themselves a comfortable retirement. The 401(k) retirement plan is a great vehicle for this.
If your company offers you the option of one, take advantage of it. The 401(k) has plenty of tax benefits, and it would be a shame not to use this resource. Especially if your company is willing to match you with all or part of your contribution to the plan.
6. Ease into the real estate market
Entering the real estate market is not as complicated or as expensive as it sounds. Nowadays, you don’t need a lot of start-up capital or good credit to get into it, which makes it a great place to start investing. An easy way to dip your toes in the cool waters of the real estate market is to try real estate crowdfunding.
This technique enables you to own a fraction of large commercial properties, without all the headaches of being a landlord. You can own a fraction of the property and passively make money in the background.
7. Treasury securities
The last tip on how to invest while on a budget takes a different route to the stock market. Treasury securities, or saving bonds, are not a get-rich-quick scheme, but they are a good place to park your money.
Investing in treasury securities is a safe and secure way to keep your money in one place and gain interest. You can also use these savings bonds to purchase TIPS. Once you’ve collected enough interest, you can move on to bigger and better investments.
Investing with a limited budget is all about being smart with your money and making informed decisions. The first step to smart investing is sorting out your debt before you get into the actual investing. Start small with setting some money aside every month or automating your savings.
Take baby steps when entering the stock market or real estate market and work your way up. Think about your retirement and consider savings bonds. You’re on your way to making good investments while on a budget!