Invest your money! Why aren’t you investing any money? Don’t you have savings? Or you don’t know where to invest?
Everyone loves to invest their money but few know the different investing options available. Just sticking to stocks because they give the best returns is an age-old concept you need to ignore.
Diversifying your investments is key to good financial stability. But to invest money you need the money and if you have little money, it isn’t that easy to invest. So today we’ll look at the 17 Ways To Invest with less money in the bank.
Are there any options to invest money without a large sum of money in the bank? The Answer is Yes. So with that in mind, let’s get started!
17 Simple Ways To Invest With Little Money
1.A Savings Account
To invest money you need to save money. It all starts with a savings account. Let me be clear, you won’t make enough money by investing in a savings account but it’s the most secure way to store your money.
If you’ve never been a good saving person, start small. You don’t need to save half of your salary, just a small portion (maybe 5% or 2% is not bad) to begin with is great. Increase your savings as and when you get more comfortable with the process of saving.
Get into the habit of stacking some money at the side, soon you’ll have enough money to invest and enough money for your future. It may be as simple as cancelling pizza Saturday and burger Sundays.
2. Secure Your Money with Fixed Deposit/Certificate Of Deposit
Fixed deposits or Certificate of Deposit are as old as a savings account goes. It’s as secure as a savings bank account yet it offers more interest. The only catch, you need to invest for long periods.
That means you’ll need to park your money for a certain period and you’ll get a greater return. So an individual parking their money for 2 years will earn greater interest than individual parking his money for 1 year.
Of course, you won’t make as much as you could investing in stocks, but investing in stocks includes risk. CD/FD is risk-free. You could break your fixed deposit or certificate of deposit, but the bank will charge you for breaking the pact. The best way to invest in this fund is by approaching your bank and asking for the details.
3. Real Estate Crowdfunding
Investing in Real estate is by far the best way to diversify your portfolio. It’s an entirely different industry, one that rarely falls down and only goes up. Previously, it was very hard to invest as property prices are so high.
But now a new wave has come that allows you to invest in real estate even if you have $1000 or less. Real estate crowdfunding or Real Estate Investment Trust (REIT) allows you to combine your money with other investors in a property. Or you can invest in real estate stocks.
These provide good returns, the entry value is also not that much so you could start investing in real estate right away. There is no rule that you need to be an accredited real estate agent, anyone is eligible to invest.
4. Don’t miss on Metals like Gold
There is no denying that metals like gold are bad investment instruments. Gold is here to stay and its price is going to increase. The average annual return on gold for the past 20 years has been 10% more or less which is better than most bonds and Certificate of deposit/fixed deposit.
The price of gold had been volatile in the short run, but it has always promised good returns in the long run. When stocks and bonds fall, it’s gold prices that rise. So I insist you invest in gold right away.
It’s safe, it’s beautiful and yes it is better than many investments out there. You can also invest in gold stocks if you like!
5. Buy Low-Risk Stocks
The most well-known way to invest money is the stock market. Your friends invest in the stock market, your neighbours have their entire savings in the stock market, people love the stock market cause it gives us the best returns.
But if Covid-19 has taught us anything it’s that the stock market isn’t always pretty, and stocks are risky compared to many other forms of investment. What should you do to not make losses? It’s Simple – Do your research.
If you know the company you’re going to invest in, your risk reduces as you’re confident in the company. With little money to invest, I suggest you don’t invest in high-risk stocks, (small-cap and mid-cap stocks), instead invest in low-risk stocks (large-cap stocks).
These include the largest companies that aren’t too volatile and give consistent returns. These stocks are safer to invest and must be included in your stock portfolio.
6. Be Safe With Government Bonds
Investing in bonds isn’t as popular as stocks, although, in the olden days, bonds were very popular. A bond is simple words is money that you give to a company as a loan to expand and conduct its operations.
They are generally issued by governments and corporations when they need to raise money. This is secure as most bonds are government bonds and are backed up by the government.
Bonds pay interest regularly, if you like steady income with security and high liquidity, bonds won’t disappoint you. Most people avoid having bonds because they aren’t as good as stocks.
When the stock market falls, usually the bond market rises. And when the bond market falls, the stock market rises. So you must keep your toes dipped in both the buckets to have a balanced investment portfolio.
7. Unique Collectibles
A very different way of investing you may say, if you know what you’re investing into, the returns can be exorbitant but if you buy anything you see without proper knowledge, you’ll probably lose your money.
This is that type of investing where the risk is too high so is the returns. Unique collectables can be anything from art to coins to ancient devices to guns to vintage tech to comic books to medical devices.
Anything random, ancient and unique can be highly valuable thus collectable. Don’t even think of entering this space without doing your homework. You need to be able to tell the difference between a forgery and a real piece, there are many forgeries out there and I don’t want you to buy a forged artwork for its real value, it’s a waste of valuable money.
You can get started on online e-commerce platforms like Etsy, eBay, Amazon or shop locally and find out unique items that you know have a high value.
8. Invest in Another Person’s Future
You’ve probably heard the phrase, ‘The more you give, the more you get’. I’m not suggesting you give all your money to charity but a part of your saved money must go towards helping someone secure his/her future.
You were fortunate enough to make money and live on your own but not all have this luxury. There are a few orphanages that you could donate to.
If you want to be more personal and want to see one kid progress, you could always look for institutions that let you pay for one child’s education and necessities. Give to those who need it and someone will give something to you when you need it.
9. Mutual Funds
Mutual Funds are investments that pools money from many investors and invests that money into stocks, bonds and other short-term debts. Mutual Funds are managed by financial advisors and well-known stock brokers.
Each time you invest in the Mutual Fund, you’re investing in the specific fund and gaining the income it generates. For a beginner investor, Mutual Fund is a great option and your investment portfolio must contain a few Mutual Funds.
You can talk to your financial advisor and adjust your risk portfolio and invest accordingly. If you have little money to invest, I suggest you take up a low – medium risk mutual fund.
10. Invest In Yourself
Investing in yourself can and will always pay the highest returns.
- To find out what skills are required in the market.
- Make a list of 20 such skills
- See if they will be valuable in the future.
- Then check out each skill and see if you are interested in learning it.
- Buy an online course and learn everything in it.
- Read articles and listen to podcasts on your skill.
- Get some practical experience (freelancing/job/research) and add that to your resume.
Follow these simple steps and I’m sure you’ll learn a new skill. Then use that skill to get a promotion or start a business. Companies love when employees learn new skills so if you learn a new skill, let your boss know, you’ll probably get a raise or a promotion or a job profile shift with a better salary soon.
An offline course may get expensive so stick to online courses. Nowadays you can learn any course by experienced professional leaders in that space. Use Skillshare to find out such courses.
11. Your Online Business
Do you want to write your destiny? Almost all of the investments mentioned here involve putting money in something, in someone else’s pocket but starting your online business means investing in your business.
If you’re determined and have good business acumen, starting a business might be an awesome investment option. You can easily start an online business from the comfort of your home.
All you need is a laptop and a good internet connection. You can buy a website for a very affordable price so even if you fail you won’t lose a lot of money or you can start a business selling products on Amazon and have a website to write articles on the products you’re selling on Amazon.
It’s easier than ever to start an online business, in just a few clicks you can make payments and start your entrepreneurial journey. Here are a few articles you can read if you are serious about starting a business:
- 5 Great Business Ideas For Millennials To Make Money in 2021
- 26 Side Hustles You’d Be Crazy To Miss
- 4 Awesome Skills To Learn Online
- 6 Super Easy Weekend Jobs For Extra Income (2021)
12. Pour money in your Employer Retirement Fund
Double your money by investing in your employer retirement fund. In India, it’s Employees Provident Fund (EPF), in the USA it’s 401k. It all means the same. If you put 2% of your salary into this Employer Retirement Fund, your employer too will have to put 2% into this fund.
It’s a really good way to grow your money for your future. The only downside is that you can’t withdraw this money till you retire, you can but you’ll be charged for doing so.
Even then, it’s still one of the best ways to invest, especially for your retirement as your employer will contribute equal amounts as you into the fund. That’s easy and super secure money for you, isn’t it!
13. Pay Your High-Interest Debts
You shouldn’t invest your money if you have high-interest debts! Especially if the interest rates on your debts are double-digit, forget investing and solely focus on paying off debt.
There is no guaranteed way an investor can get double-digit returns on their money. Paying off your debt will reduce your stress and make you feel happy.
You can easily free up more money and improve your financial situation by getting rid of those high-interest debts.
The minute you’re done with debt payments, start investing your money in various investment instruments. And promise me one thing: Don’t Ever Take Debt Again!
14. A Good Financial Planner
Let’s face it, you can’t decide one day that you want to invest and be the master of investing. You need to learn about whatever it is you’re trying to invest your money in. Be it stocks, bonds, bitcoin, gold, real estate or something else, research and understanding of how those market works are crucial.
If you don’t have the time to learn these things or don’t have the patience to take simple steps towards profits, it’s best if you hire a financial planner.
Financial planners breathe investments so they know what to invest in, what not to invest in, how to invest, how much to invest, when to invest and why to invest.
They guide you and help your investment portfolio grow upwards. I don’t think financial planners will be too expensive, they usually work on commissions and do a good job.
There’s a catch, while all financial planners act like professionals and promise you double-digit returns within the first year, your work is to ask them for proof. They might be scamming you and looting your money.
So before choosing a Planner, ask your friends and family who they go to and see if that financial planner will suit your needs.
15. Lend Money To Others (P2P)
Financial institutions, mainly banks, use the money we keep in our savings account to provide loans to businesses that need credit. Bank pays you a nominal rate of interest, charges the business that needs Credit a reasonable interest rate for taking the loan and the difference keeps it to itself.
For example, Banks charge 7% for loans, give you 4% and keep 3% to themselves.
By lending money to others directly, you can cut the middlemen i.e Banks and other financial institutions.
You’ll earn more interest in doing this method and the borrower will have more flexibility than what the bank offers.
The downside to this: if the business or the person that needs the money defaults payments or becomes insolvent, your money may never come back to you.
Liquidity is another reason why this may not be suitable for all investors. So for who is this? This type of investing is for that investor who doesn’t need urgent cash and trusts the business he lends his money to.
16. Your Own Future Retirement Fund
If you don’t have an employer retirement fund, you can start your retirement fund right now. It’s simple:
- Grab a pen and paper and calculate how much you think you’ll need for retirement.
- Then divide that number by X years (your retirement age – your current age).
- Further, divide it by 12 (months) and you’ll get an amount, that’s what you must save for your retirement each year.
Even if you have an employer retirement fund, you can’t rely on it completely. It will help you during your retirement but will that much money be sufficient? Considering all your expenses and unexpected expenses?
I doubt, so make a separate account for your retirement needs. It’s best to start now and slowly fill up your retirement fund account. If you have a specific retirement fund in your country that is tax-deductible, skip the steps I’ve given above and invest in that fund, you’ll get tax deductions and that’s awesome!
17. A Wholesome Emergency Fund
There are only two occasions when you shouldn’t be investing,
- When you’re in debt
- When you don’t have an emergency fund
If you read my articles, you know that I insist on having an emergency fund. An emergency fund acts as a foundation for your Financial Future. On average, having an emergency fund of up to 6 months of expenses is ideal.
If you are in a position to contribute more, feel free to put in more. If less start with 3 months of expenses and slowly more forward. Won’t be going in deep on why you need an emergency fund, I’ve explained it in this blog article.
Also, make sure you store this money in a savings account where you can withdraw money at any time easily.
Invest With Some Money?
I’ve shown you 17 ways you can invest your hard-earned money wisely. I don’t recommend you invest in all these 17. Pick a few that suit your requirements, your risk tolerance levels and your age.
If you’re young, I would tell you to invest most of it in yourself, then make an emergency fund and fill it up, then invest consistently in stocks, bonds, gold and other such things. Why people go broke in stock markets is because they don’t have a backup option.
If the stock market crashes they don’t have a safety net to provide a roof on their shoulders. That’s where emergency funds and retirement funds are essential.
Keep some money in risky investments that have a huge upside and keep some money on stable safe investments that will always give you steady returns.
Have you started investing in any or all of the investments I’ve stated above? Do You have any special investments ideas that aren’t in this list? Let me know down in the comments and I’ll keep adding it to this list.
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After all, sharing is caring and my goal with this blog is to share my knowledge with everyone! Thank you.