It’s a common misunderstanding that investing requires a large amount of capital. Technically speaking, you can start investing with just a dollar. The average income earner typically invests thousands of dollars or less. If you don’t have more than $10,000, don’t be discouraged. There are still plenty of ways you can invest small amounts of capital. Here are some ideas to get started.
Certificates of Deposits
Also called fixed deposits, these certificates are savings vehicles offered by banks. They are different to savings accounts. Mainly, certificates of deposit have higher interest rates than a regular savings account. Banks offer consumers these certificates based on a time period such as one year or five years. During this period, your money will compound interest passively. You will not be able to withdraw the money until the investment has matured.
Individual Stock Options
Buying individual stock is also an option for casual investors. It should be noted that individual stocks, like up-and-coming marijuana stocks are far more affordable for casual investors. However, this would require significant research before you think about buying any stock. As long as you are willing to investigate the company the stocks originate from, individual stocks can generate great returns.
Bonds are considered less risky than stocks. A bond is essentially an IOU between the investor and a company. This is a form of debt that should be paid back to you unless the company defaults and completely goes under. Bonds are also issued by governments. The risk of treasury bonds is determined by how rich and stable the government is. U.S. government bonds, for example, are not as risky as treasury bonds from Haiti. You can choose a mixture of corporate and government bonds to invest in and generate monthly passive income.
An individual retirement arrangement is the best way to secure your finances in the future. With an IRA, you are essentially investing in yourself. You won’t actually get to choose the investments unless you switch over to a self-directed IRA. Making contributions toward your retirement is possibly one of the best investments you can make. The earlier you start, the longer the interest would have to compound.
If the capital you can spare is really small under $100, consider lending this money to a peer or a colleague at a small interest rate. In recent years, a number of peer-to-peer lending websites have popped up, allowing just about anyone to lend money to strangers. You can consider using one of these sites to make your money grow at an interest rate you choose.
Perhaps one of the easiest and safest way to invest small amounts of cash is in a savings account. Though the interest yield is low, you will have the option of being able to withdraw your money anytime you want. Shop around first to find a savings account that offers a desirable interest rate.
Keep in mind that paying down debt is also a form of investment. Use small amounts of cash to reduce debt as much as possible so that the interest doesn’t keep accumulating.