There is a common misconception that to participate in any kind on investment, you need to have thousands of dollars stuck away somewhere.
Ok, granted, the more you invest, the more you are going to make. This, however, is not to say that any willing soul with a few bucks cannot partake in investments.
In fact, you can invest with as little as $50. The main goal of investing is to build wealth for the future. To be successful at it, you must teach yourself good habits such as tucking away a little money every month into savings.
Let’s find out more.
1. Making Use of Investment Apps
One of the very best ways to invest little money is to make use of investment apps. You think your mobile phone is a handy tool that you just can’t do without? Well, you are about to love it even more.
These apps can be downloaded for both iOS and Android and offer users the chance to participate in the stock market as well as save money from their daily spending.
Acorns lets you link a credit or debit card. It works by rounding up your change every time you make a purchase and automatically invests it in an ETF portfolio. This is the spare change you would have received if you had used cash.
Stash works in a similar fashion to Acorns only this time you will be investing the money yourself. But not to worry, there are educational resources to help guide you through.
Robinhood allows its users to take part in stock market trading at zero commissions. Users can also take part in ETF and options trades. Simply link your bank account and fund your Robinhood account.
Digit analyses your daily spending and uses its algorithm to pick the best savings amount for you each day. And the great thing is you don’t have to think about it.
2. Individual Retirement Accounts
If you are a freelancer, you will not be in a position to enjoy the employer-sponsored retirement plans. This is not to say you cannot set up your own individual retirement plan though.
As long as you have income, simply direct a portion of it to your IRA or individual retirement account.
One of such is Betterment—among the largest rob-advisors on the internet. Betterment provides its customers with a one-stop shop for their investment needs with both retirement and investment accounts.
With their IRA accounts, customers have access to a technology-driven portfolio where their money is invested in diversified ETFs. These are carefully selected to provide the best returns for building wealth as well as for retirement.
Betterment is an automated system. It determines your goals, time, and your individual tolerance for risk. The system then comes up with a custom portfolio suited to your very needs.
Now, the portfolio is not static and over time, certain elements will change to keep your investment on track with your goals and needs.
Investors do not manage their accounts. This again is automatic and all that is required is to fund the account regularly. The method used by betterment to grow the funds is based on the MPT or modern portfolio theory.
Another big player in the robo-advisor industry is Wealthfront. Similar to Betterment, customers funds are directed toward investments in ETFs. It will also consider the individual’s risk tolerance and goals.
What sets Wealthfront apart from others in the industry is their savings model – known as “path”. This was developed by a special team of PhDs and allows investors to set their financial goals. It works by factoring in the money in your other accounts such as mortgage and bank accounts and uses the information to provide you with the best investment plan.
The minimum investment required by Wealthfront is $500. Investors can choose between the traditional IRA or the Roth IRA plans.
But what is the difference between the two?
Well, with the traditional IRA, contributions are eligible for tax deductions while with the Roth IRA, there are no tax deductions.
3. Invest in Traditional Markets – but with Bitcoin!
1Broker is a cryptocurrency exchange broker with their own special and unique way of helping investors achieve returns on their investment.
Unlike with most of its kind in the market, 1broker allows you to trade commodities, stocks and the forex market using Bitcoin.
If you are only beginning to understand how this works, do not worry. You still get the opportunity to make decent returns by following and copying trades from successful traders. Just set aside a small amount and place it on the trades of your favorite trader. If he wins, you win and if he loses, you lose as well.
Opening an account is easy and there are no fees charged for depositing funds or making trades. Just a withdrawal charge of 0.001 BTC.
4. Real Estate Investment Plans (REITs)
Investing in real estate can be an attractive venture with the potential of making good returns. The problem is that for most people with little money, it can seem like an impossible prospect.
That’s where REITs come in. By pulling resources with several like-minded investors, the deal no longer seems out of reach. The income generated can then be shared among the investors.
Real estate investment plans are essentially companies that manage portfolios of property mortgages.
Fundrise is an online REIT that allows you to invest in top quality commercial real estate. One of the reasons behind its effectiveness is it cuts out the middleman and allows customers to invest directly.
The minimum investment is $500. Fundrise is there to guide investors in making the best choice by allowing you to pick a broad category of options available and helps you pick where to invest the money.
While there are plenty of other crowdfunding websites offering the same services, Fundrise excels due to its simplicity of investing, good returns, lower fees and the ability of investors to reinvest dividends. You can choose the best strategy based on your tolerance for risk as well as your goals and does the rest for you.
5. Peer-to-Peer Lending
With peer to peer lending, borrowers are simply matched with a lender through a platform. It is fast and easy but comes with higher risk especially for the lender.
The Lendingclub is among the best platforms online. Lenders purchase notes which represent a portion of the loan amount. The Lendingclub then screens borrowers and offers the loans to the qualified individuals.
In exchange, lenders will receive competitive returns on their investment. It’s a win-win type of situation.
Prosper is yet another excellent platform. Borrowers can get a loan with a fixed rate and are allowed to choose between a 3 year and 5-year payment plan. What more, the rate will not go up over time.
The process is super easy. Simply pick a loan amount an select your rates. You will be provided with several offers and you can pick one that best suits your individual situation. The money will then be sent to your bank account.
As an investor or lender, Prosper allows you to earn returns from their proven platform. Simply browse the loans from proven credit-worthy borrowers, select a loan and your returns will be automatically deposited to your account.
6. Thematic Investing
Now, this is a concept that is yet to catch on but is proving worthwhile as times go on. With thematic investment, you are basically investing in a portfolio consisting of elements that follow certain trends or themes.
Motif is such a company that is a combination of portfolio management and brokerage firm. Investors can participate in stock and ETF trading but what sets it apart is the Motif. Each motif comprises of 30 ETFs and stocks. For as little as $9.95 it is an excellent choice for people with little money but still want to invest in ETFs, buy fractional stocks, or buy IPOs.
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