Realistic Ways to Invest If You’re Broke
You’ve probably heard how important it is to invest in something, whether that’s the stock market, bonds, or even real estate, but how do you put money into any investment if you don’t have any?
That’s one of the biggest hurdles young people and low-income individuals see on their way to building wealth through investment. They feel like it takes money to make money, and that’s not untrue, but it also doesn’t necessarily count you out of the investment world.
Compare Online Savings Accounts
Before you can move into the world of stock market investing, or more advanced approaches, it’s best to have a grasp of the fundamentals. One of the core elements of any healthy financial strategy is having money set aside. You can do this in the form of a savings account, and if you browse online savings account options, you’re more likely to find competitive interest rates. This is not only allowing you to set money aside that can later be invested, but it’s a small investment in and of itself since you’re earning interest.
An ETF, which is an exchange-traded fund, is an attractive investment option because it gives you the benefits of a broadly diversified portfolio, but you’re getting them at a low cost. ETFs are somewhat like a stepping stone to mutual funds for many investors. Along with the lower operating costs of an ETF, they also offer flexibility, transparency and tax efficiency. ETFs, like stocks and bonds, can also be traded intraday, which is beneficial in terms of speculative trading.
Penny stocks are much like they sound like—inexpensive stocks. Trading penny stocks is often seen as more a short-term strategy, but it can work well when you pair this type of approach with something steadier and more long-term, such as ETFs. If you’re unsure of how penny stocks work you can take advantage of online training courses and programs like Timothy Sykes’ Millionaire Challenge. The benefit of starting out your stock market investing with penny stocks is that you learn the fundamentals of the market, and as your income grows you can use this knowledge to build your wealth by playing the market.
If you don’t have a lot of money or time to put into investing, you can let technology do the work for you. Apps like Acorn offer automatic investments of your spare change, so you can effortlessly grow your wealth, quite literally with pennies. Acorns and similar platforms follow a concept called “Micro Investing.” It works by having you connect your cards and accounts, and then every time you make a purchase the total is rounded to the nearest dollar. Your change is invested on a recurring schedule, and you can also add amounts to your account anytime you want. With Acorns, every dollar you invest is automatically diversified across 7,000 stocks and bonds.
Skip Trading Fees
If you are low on extra money and hoping to invest in the stock market, you likely don’t want to have to pay high brokerage fees. Robinhood is a new mobile app that lets you avoid high fees and take advantage of free stock trading so that you can maximize your money. Robinhood is an innovative platform that eliminates commission and is based on advanced technology. Users create self-directed orders, and the low-latency trading systems of Robinhood ensure the execution goes as well as possible.
Not already being wealthy doesn’t count you out of most investment opportunities. You may have to a little more creative with your approach, but once you master the basics and realize some profits you can put that money back into your investments and watch your wealth grow over time.