It seems like everyone is investing these days, but not everyone has the funds to participate in the stock market or other forms of investing. The good news is that you don’t have to be a millionaire (or even well-off) to begin investing.
If you don’t think investing is for you— no matter the reason— just know that it’s easier than ever to start investing. Investing (in whatever form) can be beneficial for everyone because it can be a great addition to your retirement and you’ll have more peace of mind knowing that you have extra money stashed somewhere. Here are four tips on investing when you have little money to invest with.
1. It’s Okay to Start Small
The first tip for investing when you don’t have a lot of money to invest is that it’s okay to start small. You don’t have to buy hundreds of shares of stock just to see your money increase— in fact, it takes a while for most people to see a return on their investment. And this applies to wherever you want to invest your money— even if it’s something as simple as opening a savings account. Start small while you can and then when you’re in a better financial position you’ll be able to invest even more.
Acorns is an example of an investment broker that allows you to begin investing with just change. This is known as micro-investing, and it’s a good option when you don’t have much money to invest with.
2. Buy Fractional Shares
When it comes to investing in stocks, sometimes the actual stock is too much money— even for a single share. The good news is that some companies allow you to buy a fraction of a share, and depending on the specific company, you may be able to buy half, a quarter, or even less than that! SoFi Active Trading is an example of a broker that can provide access to fractional shares. This is another way that you can start small and begin to build your investment portfolio.
Buying fractional shares also gets you familiar with the world of investing in the stock market. It also feels less risky when you’ve only spent a few dollars on a partial share.
3. Look into Real Estate
This may seem like the opposite of investing with little money since real estate is extremely expensive. However, there’s a way that you can invest in commercial real estate (which costs more than residential real estate but provides more returns) without having to pay the expensive price. Consider investing in REITs (real estate investment trusts), which are similar to mutual funds. This method allows you to invest in real estate and receive dividends from your investments.
You can also look into crowdfunded real estate investing, where you and a large group of investors pool money together to purchase a property. However, the property makes money (e.g., rent from tenants), which is how you and the other investors make money from it.
4. Invest in Yourself
Finally, one of the biggest and most important investments you can make is in yourself. How can you improve yourself and get on the track to having more money? There are a lot of ways that you can invest in yourself, from furthering your education to get a better job or simply putting money back.
Opening a savings account through a mobile bank is a great way to invest in yourself and save money for the future. Consider putting some of your money away into a savings account so that you’ll have the extra money for a rainy day. The majority of savings accounts allow you to earn interest on your savings, especially if you never touch the money.
Before you start investing, it’s important to understand your goals. Whether you’re saving for retirement, a home, a car, or just because, it’s important to understand why you’re saving/investing. You also need to understand the risks of investing (all investments come with some level of risk) and that saving and investing go hand in hand.
Finally, there’s no single type of investment that is best for everyone, but it’s beneficial for most people to regularly place money in a savings account at the very least. Depending on the bank you choose, there may or may not be hidden fees, so do your research before choosing a bank for your savings. Also, no matter what you invest in, you must remember to be patient.
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