8 Easy Ways to Start Investing with Little Money

8 Easy Ways to Start Investing with Little Money
Source: Aarp.org

The easiest road in life is to work for someone and have a steady income. Sure, it’s safe, but it doesn’t get you far financially unless you get frequently promoted. If you have a little money saved and you’d like to do something with it to watch it grow and work for you, there are some easy ways to start investing it that don’t require big money. Check them out and find the one that suits you best.

1. Online “Mini Inversions”

For people who don’t have big bucks but still want to start putting their savings to good use and see that money multiply, there are several websites dedicated to “mini inversions”. They consist of an array of public companies who put their stocks at a very low price so people like you and me can buy them and play the market at very reasonable amounts of money. You can either pay a member of the website you chose for them to manage your inversions or you can do it yourself and start to learn how the stock works. Some of the most popular online mini investors (also known as “robo-investors”) are Wealthfront, M1 Finance and Betterment.

2. Start Your Retirement Plan on Time

The most important reason why people want to invest their money and make it grow is because they’re looking for financial stability in their last stage of life. Getting the retirement you want, or more like the retirement you need, can be a difficult, or almost impossible, task when you’re always living on a budget. Don’t be scared to start your 401(K) or other retirement plan. You can start by allocating just 1% of your salary and from there raise it by 1 percent per year. The numbers won’t even represent a big breakdown for your finances, and if your employer makes a matching contribution, you’ll have more than you thought you did.

3. Low-Initial-Investment Mutual Funds

A mutual fund is made up of investment securities that make it possible for you to invest in a single transaction. The best way to take advantage of this investment option is to agree to automatic investments, otherwise you might have to be subject to the mutual fund companies’ minimum figures of anywhere from $500 to $5,000.  By agreeing to the automatic investments, said companies can waive the minimum and let you start with $50 and $100 monthly investments. Other very secure type of investments are index funds. These funds feature lower commissions and transaction costs, so you could say index funds are even safer for small inversions.

To make things even simpler for you, you can actually set up an automatic investment arrangement taken straight out of your payroll. By automatically depositing the investment you won’t feel like you’re losing money, and you can easily set it up with your HR department.

4. Be the Investor of a Friend’s Business

If you’re not confident in investing your hard-earned money in some company you’ve never heard of and doing it through your computer where you don’t see what’s going to happen, there are plenty of other options to invest your money and make it grow. Everyone has a friend with a genius idea for a business, they’re very talented, hardworking and you truly believe they could be very successful if they had their business. The problem is, like thousands of people out there, your friend can’t find financing for their project. If you have some money saved and you’d like to make it grow, propose a partnership where you only participate by investing money, and your friend will take care of business. Once business starts picking up, you’ll only need to collect the earnings from your partnership!

5. Treasury Securities

Ok, let’s say this upfront. There’re very little chances of you becoming a millionaire with Treasury Securities, but it’s still a really good alternative to just keeping your money sitting in your bank account or under the mattress. Treasury Securities, also known as saving bonds, are stocks sold by the US Treasury and you can buy fixed-income US government securities with maturities of anywhere from 30 days to 30 years in denominations as low as $100. Treasury Securities are considered low risk investments, a safe way to get your earnings in interests and tax inflations. They might not give much money back, but there’s no chance of losing the money you have.

6. Real Estate Crowdfunding

Did you ever think you could invest in real estate with small amounts of money? Thanks to some groundbreaking entrepreneurs now it’s a possibility. Real estate crowdfunding consists of a platform where people can sign up and invest in real estate without becoming landlords or house flippers. Starting at $500, you can pick the real estate you want, invest in it, and once the developers make money, you’ll make money too. Your returns can vary based on the projects you choose to invest in, but you can expect an average return over 11%. Sounds attractive, right?

7. Invest in Low Cost Franchises

When you hear the word “franchise” you think of big money, money you surely don’t have. But not all franchises are million-dollar McDonalds that barely no one can afford. There are hundreds, possibly thousands, of other businesses looking to expand through the country by selling franchises. If you have a pretty decent budget, just start looking for potential franchisors that suit your needs and likes. Remember, they can be anything from a yogurt stand to a small office supplier. Franchising is a good way to start a business and skipping the part where you don’t know if it’ll work out, the method has been tested for you before you even bought the franchise.

8. Peer to Peer Lending

Lending platforms are very popular nowadays, because they have great benefits for whoever is looking to invest their money and make it grow. Peer to peer lending platforms and websites are places where people who need money go looking for someone who’ll lend it to them. By lending your money, you’re rewarded with very attractive interests once you get paid. You can lend as little as $25 on a single loan, and most platforms require a minimum inversion of $1,000, which means you can have up to 40 different loans at a time.

As you see, there are many flexible ways in which you can invest with small amounts of money. Taking the first step is important but being constant can eventually lead to a pretty decent extra income.