Some people wait until later in life before they start investing because they assume you need a big bank account just to get started. But why delay living your dream life of financial independence?
We at InvestNaija believe this is a wrong assumption – investing is not only for the rich. It is for everybody, and you can start building your dream life with a little amount and your money will grow over time with compounding – a phenomenon best described as the 8th Wonder of the World.
What does this mean?
It simply means the sooner you start investing, the more interest you will accrue in the long-run because you earn on your initial savings as well as the interest your investment attracts overtime.
There are several ways to start investing with little money. Technology has removed the barriers to entry with myriads of online and mobile applications offering easy to invest platforms that allow you to invest- no matter how little your money is.
The key thing in investing is getting started- but before you get started, here are four basic rules to follow when investing little money:
- Minimize fees or charges
- Minimize taxes
- Balance your risk and return
- Diversify your portfolio i.e. invest in different products from stocks to treasury bills to bonds
So, how do you get started with little money?
High Yield Savings Account
Similar to the regular savings account, High Yield Savings accounts help you develop the habit of saving and you can later reinvest the money in the future. They are easy to open and have little minimum account opening requirements.
Micro-Investment Apps
Many micro-investment apps allow you to invest with little using an easy and straightforward process. There’s no minimum initial investment required to create an account and you can invest in fractional shares of stocks and exchange-traded funds without having to pay trading commissions or fees.
Mutual Funds
Mutual funds with low initial investment amounts are ideal for investors with little money. This mutual fund spreads your money across bonds and stocks.
Treasury Securities
Treasury securities offer investors with little money the security of investing in government-backed securities.
Robo Advisors
Robo advisors make investing simple by automatically selecting investments that best match your investment objectives and risk appetite; spreading it among different investment products like stocks, money markets and fixed income instruments like bonds. A Robo advisor is ideal for a person with little money as it allows you to invest without incurring the cost of hiring a financial advisor to manage your assets.
Peer-to–Peer (P2P) Lending
If you have little money, you can put it into a bank account where it will be pooled together with other small investors by a P2P lender and used to fund business projects.
Real Estate Crowdfunding
You can invest in real estate by pooling your money with a large group of individuals to raise funds for property development. You automatically become a partial owner of the property and will receive returns from the profit made from selling the real estate.
Key Takeaway
The key to building wealth is developing a good savings and investing culture. You can build wealth if you start early and remain consistent with investing.
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1 Comment
Good!