How to invest with minimal funds: 8 steps to start investing.
Image Source: Pexels
A popular misconception is that investment is difficult and only for those with a large amount of money. If you don’t invest your money you will lose money in the future. Even if investing right now seems like a waste of time, remember that small investments will grow over the years and create long-term wealth. Here’s how to get started investing with little or no money. Make Small Contributions
While you should always prioritize an emergency fund and paying off high-interest debt first, any other extra money in your budget can be allocated toward investing. Start with small contributions, and choose an easy-to use brokerage platform such as Vanguard, Fidelity or Charles Schwab.
2. Use Micro Investing Apps
Image Source: Pexels
Apps like Robinhood or Acorns, which allow you to buy fractional shares and invest with small amounts of cash, are great for investing. Investing has never been easier. You can track your investments easily, trade shares and watch your money grow. Even automate investing with robo-advisors such as Betterment and Wealthfront. Consider Real Estate Crowdfunding
Real Estate crowdfunding allows you to own a share of investment real estate properties with other investors. Several sites make real estate crowdfunding possible like Fundrise. Fundrise makes it easy for investors to get started in real estate crowdfunding, and begin buying both residential and commercial property. Your money is invested in REITs, which are used to buy properties, purchase land, and develop property. Do your research before committing to an investment.
4. Contribute to a Retirement Account
Contributing to your employer’s retirement plan can be a great first step to investing. There are many different types of retirement accounts that you can choose from when setting up a new one. How much money you contribute will depend on factors such as your retirement plan, the employer’s match, how long until retirement and the maximum annual contributions. Index Funds are a good place to start. Index funds are funds that track the performance of a grouping of companies. The S&P 500 is one of the most popular index funds. It consists of 500 US companies from various industries. S&P 500 has averaged a return of 10.7% per year over the past 30 years. Over time, you can see good returns with even a small amount of money. Avoid mutual funds with high management fees. Buy bonds or certificates of deposit (CDs). Bonds are often very affordable, allowing for a small initial investment. The same goes for CDs. Banks offer most CDs for less than $100. Bonds and CDs offer different terms in regards to short-term or longer-term investments. You can choose the duration of your investment. Consider creating a CD or bond ladder.
7. Invest in Exchange-Traded Funds. With an ETF, you can track any industry such as tech. ETFs are traded like stocks, so you can purchase and sell them at any time. You can also buy fractional or single shares. Many ETFs are low-cost or have fewer fees. They offer good potential for the long term and low risk.
8. Money Market Accounts (MMAs)
An MMA offers higher rates of interest than a typical savings account. An MMA is a great option if you’re looking for a place to keep your money safe and still have it available. You have a monthly withdrawal limit and a minimum balance requirement.
How to Start Investing with Little Money
