It is incredibly important to get started in Investing as soon as you can. However, most of us don’t have thousands of dollars to get started off with, or we might not be willing to risk that amount of money.
There’s no shame in starting off slowly in the investment world. The important thing is that you are getting started. The power of compound interest is a big thing, and trust me, the longer you wait to invest, the lower your bank balance will be in the long term.
So, wondering how you can start investing without a lot of money to begin with?
In this post, I am going to break down five ways in which you can get your foot in the door of the world of investments, without putting any more than $500 on the line.
If you haven’t got $500 to use on investments, then I would recommend taking a look at some of our posts about increasing your income. Perhaps this one!
Index Fund Investments
The downside to investing into individual stocks, is you have the potential to lose big! If you put $500 into Apple stock, then they went bust tomorrow. You’d lose the whole of your $500 investment. That’s where Index Funds really shine…
An Index Fund, such as one which follows the S&P500 will track a grouping of companies. In this examples case, 500 companies within the S&P500. Therefore making this type of investment a lot less volatile. If one company within the S&P fails, then your investment is propped up by the other 499 companies stock price.
Compound interest is a big factor when it comes to Index Funds. Warren Buffett has stated that he feels an S&P500 Index Fund investment with Vanguard is the best option for anyone who doesn’t have the time or interest to study and research all of their investments. You could put $100 into your Index Fund per month over time, and compound interest could lead you to retiring a very wealthy person.
The greatest benefit of Index Fund Investments is that you don’t really need to be an expert in the stock market. This makes them perfect for your ‘average Joe’ investor who just wants to put their money into something reliable and time-proven. On average, the S&P500 returns around 8-12% annually. Not too shabby if you keep money in your Index Fund over 30+ years.
Books, courses, seminars and more!
There is nothing better to invest your money in than yourself. If I told you that you could spend $500 and I would teach you how to make $100,000 by the end of the year, would you do it? Of course you would! The problem here is that a lot of people claiming these statements are full of rubbish, so you really need to find the quality among the crap.
My personal favorite (Sorry to sound like Tai Lopez…) is to invest in books to feed my self investment. I try to read for at least 30 minutes every morning before I begin work. I have a giant pile of books in my office which I am trying to slowly but surely work my way through. I’m the worlds slowest reader, so it takes me a while to actually finish a book. However it is worth it! I’d recommend getting some sticky tabs to place in your book as you read to mark key quotes and important statements. That way, you can easily refer back to them instead of re-reading the whole book again.
Take a look online, there might be some valuable seminars locally you can attend. Some of them may even be free, which is obviously even better. These seminars can also be great opportunities to network, so bring your business cards!
I’ve written a post about the best entrepreneur books of all time, get some ideas there!
Dividend Paying Stocks
You can get stocks which primarily pay out a Dividend every 3 months or so, so that you can build up a consistent passive income.
Now, you’re not going to make a killing with a $500 investment, however, over time you will really be on your way to a good and solid extra flow of income.
If you start now, in 10 years time you may have a good enough dividend portfolio to be able to quit your day job!
Do you run your own business? Perhaps you would like to start a business. Well, put that $500 into that! An investment doesn’t have to be into someone elses business. You could use that $500 into marketing your current business to increase income. OR you could take the steps you’ve always wanted to take into the business world.
$500 would be more than enough to get any online business off the ground!
Got a cool business idea? Let’s discuss! Normanie specialise in bringing business ideas to life.
Pay off your Debt
Sometimes the best investment you can make is the reduction of your personal debt. It doesn’t matter if you’re bringing in 12% on your Index Fund investment, if you’re spending 20% APR on a personal loan.
Focus on the most expensive debt first, and work from there. You want to consider which debt is the most significant. You could do this either by the largest monthly payment debt, or the one which has the highest APR. This is entirely up to you.
Personally, I would start with the debt which costs you the largest monthly repayment. Even if the APR isn’t the highest, it still impacts your overall cash flow the most each month.
I’ll write another blog post about paying off your debt soon, so stay tuned for that! Or comment below, I’m more than happy to discuss tips with people.