It is good to know about the different small investment ideas. Trading currencies doesn’t mean that you should know nothing about the other small investment ideas, and you should not think about them. While you trade currencies or stocks, you can have some other small investment ideas that don’t need you to spend any time on them on a daily basis. This is what I have been doing too, because I strongly believe that one should never put all his eggs in one basket. While I traded currencies and stocks dynamically, I always participated in other good investment opportunities, in several different countries. For two important reasons, I like to talk about the other small investment ideas on LuckScout.
First, it is highly possible that LuckScout turns to a portal focused on different business and money making opportunities, including currency and stock trading, and also the other kinds of small investment ideas. Second, all of those who visit LuckScout, including you, are interested in making money or at least having some extra income, but don’t know how. While you are learning to trade currencies, having a general information about the other opportunities not only doesn’t hurt, but can be useful. This is what I have experienced myself, and I am very happy with it.
In this article, I am going to talk about the small investment ideas suitable for small budgets. I am always asked how it is possible to have some safe small investments with a small money. So here is the answer:
Saving money is hard enough, let alone investing it, especially if you live on a shoestring budget or a small amount of money as a monthly or yearly income. Unless you have a massive amount of experience and background in investing, doing so can seem to be quite daunting. Just the thought of losing your hard earned savings can discourage you from even trying. If you never invested before, where do you begin specially when you are tight in budget?
Three Techniques for Beginner Investors
One common myth that confronts newbie investors is that you need a great sum of money up front. Then there’s the snowball analogy that some of you may have heard: Investing is like rolling a snowball down a hill. As long as it continues rolling, it gets larger and larger. The bigger the snowball is in the beginning, the huger it will be in the end. Of course, the same is true with money, assuming that the small investment technique applied is successful. Even if all you have is a tiny snowball, why not roll it down the hill anyway? If you’re not so wealthy, you can invest as little as $25 by using at least one of the following seven investing strategies:
1. 401(k) Account
Nowadays, every large full-time employer offers a 401(k) contributions account to enable its employees to save for their retirement. Best of all, there are no minimal amounts to contribute other than amounts established in the plan, which are reasonably low. Likewise, you can invest in any of the mutual funds within the plan, even if your contributions are small.
Instead of contributing a 401(k), you can open an IRA through a mutual fund company like Vanguard. If you have very little to start with, you can start an account through an online discount broker as these companies require no minimum balance.
3. 529 or Education Savings Plan
If you are a parent who plans to save funds for your child’s college education, a 529 is a convenient plan and offers great tax benefits. Rules of such plans vary according to the state in which the investor resides. By investing through a state or educational financial institution, your money can grow more than it would in taxable accounts. Likewise, you are entitled to tax-free withdrawals providing the funds are used for college related expenses.
4. Mutual Funds
By investing your money in mutual funds, you can automatically diversify your small investment. Likewise, purchasing shares is not expensive since the price of many of them are low to begin with, say less than $50 apiece. Also, you need not worry about what stocks or bonds you should choose. The analyzing and researching of various securities is done by financial managers who are professional investors. Whenever you buy shares of a mutual fund, you are putting your cash all of its security holdings, increasing your likelihood of small investment gains.
5. Stock Management Sites
Investing is now as easy as transferring money on the Internet. Stock management sites as ShareBuilder make investing easy for beginners. As a new investor, you are not prohibited from investing in high priced stocks. Also, you are free to make weekly or monthly contributions in whatever amount of money you choose. The number of shares you may purchase depends on how much you’re willing to invest on a timely basis. Hence, experienced investors can benefit from this site as well.
6. Share Laddering
This is like a bootstrapping technique which enables you to build funds by starting out with just a few shares of low-priced stock. As the value of the shares rise to a profitable amount, you sell enough of them to make a profit then take that extra money to purchase shares of another stock. Say, if you bought 10 shares of Green Corp stock at $20 apiece, you’ve invested $200. If Green Corp’s shares appreciate to $40 a share, your money doubled to $400. Not only do you have your initial small investment of $200, but an extra $200 to invest in stock from other companies.
7. P2P Lending
This new method of investing is an attractive option for investors with limited capital. How does it work? For a consumer who needs a loan, instead of applying for it at a bank, he or she can turn to peer-to-peer lending. Rather than a financial institution loaning money to an individual and profiting through interest charges, consumers contribute funds into a pool from which loans are made. Because no banks or credit lenders are involved, interest rates borrowers pay are lower than regular loans. Hence, loaning money is more encouraged and thus, lenders have a better chance of growing their money than they would by depositing it into regular savings accounts.
Low-Cost Investment Education
Just as sure as investing doesn’t necessarily require a great amount of cash to get started, obtaining small investment education doesn’t either. In fact, there are a number of low-cost and free ways to learn how to invest. The more you learn about this subject, the more effectively you can invest on a shoestring. Although our economy and the marketplace constantly change, most investing fundamentals remain the same. For example, the more static aspects to investing are its terms or lingo, methods of researching and analyzing companies, and types of small investment ideas.
Likewise, you must have basic knowledge about the various types of securities available (as stocks and bonds) along with their risks and benefits. So, before you spend big bucks on an small investment course, consider these alternatives:
1. Read books on investing
There are hundreds, perhaps thousands of books out there on investing. You may want to start at your public library or even surf through shelves of thrift stores to find free or low-cost books. The more recent a book has been published, the more reliable source it is. Look at the copyright date of any book you consider reading and view its table of contents to see what it covers. If you have a reading device as an iPad, you may want to consider purchasing one or more eBooks. However, all the information you need can be found for free, so that you don’t have to spend any money on learning.
2. Surf the Internet
As time goes on, more and more investing resources become available online. A vast number of sites are created to educate people who have never invested in their lives and don’t know where to begin. Unfortunately, many would-be investors aren’t even aware that these resources exist. Likewise, there are numerous business world sites that offer continuous up-to-date small investment ideas such as BusinessInsider or Motley Fool, to name a few.
3. Practice Investing with Fake Money
There are similar sites that allow you to learn to invest by using pretend money in a real investing environment. Once you are confident with your newly acquired investing skills, you can invest your own funds.
4. Watch the Financial News
Not everyone has an interest in the business marketplace, but if you do, that is a big plus. However, if you’re serious about investing, knowledge is power and the more you have, the more effectively you can make your money grow, even with a small amount. So, if you’re not a born investor you can create an interest in this subject with time.
5. Read the News
Keeping on top of current events is vital as it gives you a feel for what’s really going on in the small investment world. Not only can you stay up-to-date with your country’s economy, but the global economy as well. Such events as wars, overseas manufacturing, and natural disasters greatly affect world trade which in the long haul affect your country’s economy. Great news sources are the business section of your local paper, USA Today, or the Wall Street Journal. Learning about investing isn’t always so easy, but yet not as complicated as it seems. However, by making wise decisions, you can effectively invest on a shoestring.