How to Start Investing on a Limited Budget
A lot of people might be under the impression that they need large sums of money before they can start investing in the stock or currency markets, but that couldn’t be further from the truth. As a matter of fact, you could start investing with as little as $50 per month if you play your cards right. However, if you’re going to start with a small amount, you have to make sure that you apply the right strategies and minimize your risks. Here are a few tips for future investors that might be strapped for cash.
Go with the Cookie Jar Technique
While it’s possible to start investing with little money, you won’t go anywhere with no money. Chances are that if you have a regular source of income, you can save some for investing. The issue with saving is that a lot of people either lack discipline, or try setting their objectives too high at first.
But by saving as little as $10 per week, you could start building yourself a nice nest egg after a year, which should be more than enough to get you started. Saving $20 per week will get you around $1000 at the end of the year, which is a great starting capital to test the waters.
Look into Social Trading
Social trading is still new to the scene and the principle behind it is pretty revolutionary. Social trading allows you to copy successful traders trade for trade and bank off of their strategies. Using social trading with financial instruments like contracts for difference that allow you to use the power of leverage is the best way to invest 100 USD per month as advised by InvestinGoal. With social trading, you can browse through a variety of proven traders and look at their trades and strategies. You can also pick one based on their trading style or results. This will allow you to reduce your risk significantly while learning the ropes at the same time.
Start Looking at Bonds
Bonds are a great financial instrument if you don’t have much expertise because of their simplicity. Bonds work pretty much like IOU’s and are used by companies and organizations like governments to raise capital. When buying a bond, you are in fact lending that amount to the company with a promise to be paid back with interest. Interest is usually based on the creditworthiness of the borrower. This way, you can decide to go for low risk bonds with lower interest rates or higher risk bonds that will pay more.
Consider Index Tracker Funds
Index tracker funds are also very interesting financial instruments that are great for novices. An index tracker fund could allow you to track the whole FTSE 100 for instance. So instead of worrying about individual shares, you can start monitoring whole sectors and bet for or against them. And while they’re similar in many ways to mutual funds, they are traded on the stock market just like shares, which allows you much more flexibility.
Investing with a small budget is feasible if you know how to mitigate your risk and start with simple, easy to understand financial instruments. And with the wealth of help and information at our fingertips, anyone with the wherewithal should be able to find the assistance they need to become savvy investors.