Investing is one of the easiest and most reliable ways to earn passive income.
And, there are few better feelings than knowing that money you have is working to make you even more money on its own.
But, many people believe that investing is something that only rich businessmen or people with trust funds can take part in.
This couldn’t be further from the truth!
Not sure where to go from here? Don’t worry, we’ve got you covered.
Let’s take a look at everything you need to know about how to get started investing.
Take Advantage of Mobile Investing Apps
Some investment accounts require hundreds of dollars to open. Unfortunately, this often puts them just out of reach of many people who don’t have much change to spare.
Mobile investing apps, however, often have a very low initial investment requirement, or even don’t have one at all. They also offer a large amount of control over your portfolio.
It’s important to keep in mind that this last fact can be both a blessing and a curse. If you fail to research your investment decisions, you could end up losing money and have nobody to blame but yourself.
However, if you’re willing to spend some time on your own learning about the market, you’ll have an accessible way to put your money to work.
To help get started, you can learn about the best penny stocks to invest in.
Invest Small Amounts in a Savings Account Frequently
Not a fan of stocks (especially working with them on your own)? You could always open a savings account and start to pool your money together in there.
The key, though, is to find a savings account that offers you a high amount of interest. Otherwise, you’re essentially letting your money sit in a piggy bank.
Even if you don’t have much to contribute, proper budgeting can take you a long way when it comes to setting money aside each paycheck. Even saving $50 per month will add up over time.
To help you stay true to your investment plan, contribute to your savings account as often as you can. Set a monthly goal and turn it into weekly payments.
Doing this frequently will condition you to ensure that you always have money to contribute, which will ensure that you meet your goals in the long run.
Use Your Profit to Reinvest
It can be tempting amidst all the excitement of profiting from investment to go and spend it. This is a very common scenario with those who hit it big on the stock market.
But, it’s important to handle this money wisely, as it could be used to exponentially grow your finances.
For example, let’s say you used an investment app and a bit of research to make $2,000 off a $100 investment. While you could spend this money on car repairs, home improvement, etc., you could potentially turn this $2,000 into thousands more!
Assuming everything goes well, you can then take this profit and repeat the process over and over. None of this would be possible, however, if you simply held onto your money or spent it on purchases you don’t really need.
Consider Mutual Funds That Require Little Initial Investment
Mutual funds are renowned for being one of the least risky investments that you can make.
The genius in this strategy lies in its diversification. A mutual fund includes hundreds (and sometimes thousands) of small investments that have been researched to have very little risk. You’ll even get your own expert to manage your investment for you!
As a result, you’re virtually guaranteed to see growth over time because investments with poor performance will be offset by ones that perform well.
Mutual funds that don’t require a hefty bag of cash to get involved are perfect options for those who are looking to get involved in investing while on a budget.
Sign up For Your Company’s Retirement Plan
If you work for a company that offers a retirement plan, you’re going to want to take advantage of it in any way possible.
Although it may seem fruitless to enroll in your firm’s plan if you can’t contribute much each month, there are plenty of benefits that make it a smart investment decision. These include:
- Compounding interest over time
- The benefit of financial security for retirement
- Easy contribution methods
- Your investment gains aren’t taxed until you distribute them
To further expand on the power of compound interest, consider this scenario:
David decides to enroll in his company’s retirement plan, which comes with an interest rate of 6 percent. After reworking his monthly budget, he decides to put $50 per month away toward his retirement.
Over the course of 20 years, this would amount to $12,000 when all the investments are added together. But, given the plan’s generous interest rate of 6 percent, the actual value of his investments after 20 years would be $23,218.
As you can see, retirement plans have the capability to provide an enormous return on the money you contribute. And, as always, you’ll make more of a profit if you invest more initially.
Every dollar counts when it comes to putting money into these plans, so squeeze as much as you can out of your budget!
Knowing How to Get Started Investing Can Seem Difficult
But it doesn’t have to be.
With the above information about how to get started investing in mind, you’ll be well on your way to growing your finances in the future.
Want to learn more finance tips that can help make your life easier? This article has plenty of useful information.