For people with a limited budget, investing is something that can be accomplished. No one should be afraid to invest “too early.” Although most financial advisors recommend paying down as much debt as possible and setting up an emergency fund (3-6 months of expenses) before devoting significant sums of money to invest, these are only to ensure that you are protected.
As little as $500 and an interest in investing is enough to get started. While investors are paying down debt, they are doing themselves a favor by becoming familiar with the world of investing. Professionals such as Jacob Martinez at Market Traders Institute see investors begin their careers at all investment levels.
Super Low Budgets
There are many people that start investing between $500 and $5,000. Here are a few ideas to get started:
Real Estate Crowdfunding
Real estate crowdfunding allows people to invest in real estate without having to put in the big bucks to buy, flip, and manage residential or commercial real estate investments. Some platforms like Realty Mogul require a minimum $5,000 investment to get started.
However, Fundrise will allow investors to begin at $500. Additionally, participants are not required to become accredited investors.
One of the more exciting additions to fintech is automated, low maintenance Roboadvisors. Most companies allow an initial investment of $500 or less to get started. For beginners, most finance professionals recommend Betterment. Roboadvisors require lower fees and can continuously track your investments.
For those on payroll with their employer, they should ask about any company-sponsored retirement plans. If one exists, employees can choose how much of their paycheck (even as low as 1%) they want to go into their retirement account. These are usually mutual funds packaged as company 401ks.
Mutual Funds With Small Investments
Just because some mutual fund companies require a $5,000 initial investment doesn’t mean that all of them do. In fact, many companies will accept super low initial investments of less than $100, so long as the account owner agrees to recurring contributions in the same amount. Kiplinger put together a great list of the top low initial investment mutual fund companies.
For those with little to no experience, they can select a portfolio template and allow the company to take care of purchasing decisions.
For those that have $5,000 to $10,000 (or more) to begin investing, there are more options. One should seek to use investments to make additional investments with greater returns. Here are a few options.
Use Any Of The Options Above
Luckily, all of the ideas listed above work for larger investments. The more money that one can put into any investment simply increases the amount of return.
More and more real estate investors are starting with less than $10,000 in cash. However, the trick is often that those investors need to have strong credit scores. Alternative financing options have empowered house flippers or house hackers to make millions and gradually build themselves a real estate empire. Real estate investors are converting homes into rentals or using platforms like Airbnb to make money in vacation rentals.
Forex trading is a method of online trading that while carrying a substantial risk, also presents the opportunity for extremely high rewards. With the rise of internet trading, the Forex market has been opened up to individuals rather than just being available to large corporations.
The Forex market allows individuals to trade internationally with different currencies through a Forex broker. Market Traders Institute, an expert in the Forex Trading market, recommends that anyone interested in beginning to trade in the Forex market to find a trusted broker that they can work with.
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