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3 Tips to Start Investing with Little Money

You’ve got to spend money to make money, as the old saying goes. The only problem is: what if you don’t have any money to spend in the first place? 

Don’t worry, we understand that struggle. It can be hard to start investing when you don’t have too much money to start with. However, that doesn’t mean you’re totally up a creek without a paddle. There are ways even those on tight budgets can still take advantage of the lucrative power of investing. In today’s post, we’ll explore how every Active Man can become proactive about his investing future. 

First, build your savings

First things first, if you truly have little to no money to your name, investing might not be the smartest option – just yet, anyway. Investing is inherently risky. By putting your money on the line, you’re accepting that you might just lose some of it, or all of it, in hopes that instead, you’ll end up growing that money. This is true no matter what investment you make. 

So, first things first, you should open a savings account and put a little money away for emergencies and for the future. Using a high-yield savings account is a great way to safely stash money away to prepare for investing while still growing that money. When it is time to invest, don’t put it all on the line. It’s smartest to keep some money on the side for emergencies; you never know when you might be in a fender bender or might get hit with a surprise medical bill. 

Most people find it helpful to make a budget and stick to it each month. This way, you’ll know whether you have enough money to splurge on a night out, or whether you should instead focus on putting away extra cash for the month. 

3 Tips to Start Investing with Little Money

Next, start with a slow and steady option

After you’ve grown your emergency savings to a comfortable level (experts usually say 3 to 6 months’ worth), it’s time to start your investing journey. For beginners, and especially those without too much capital in their name, having a slow and steady investment option is usually a great, relatively safe beginner strategy. Not familiar with this type of investing? Here are some common options:

  • Index funds are collections of stocks that track a market index – you know, like the Dow or the Nasdaq. These market indexes usually trend upward over time, meaning index funds will too. While nothing in the stock market is ever certain, index funds are widely regarded as a slow, steady, and promising way to compound your money over the long term. 
  • Dividend investing is another way to slowly grow your money. Companies that offer dividends pay out yearly or quarterly. Usually, they’re larger, more established companies that you can count on to pay their dues. 
  • Robo investing is a trendy and innovative new way to invest your funds from the comfort of your phone. With just a few taps, you can decide on how risky you want your portfolio, what your long-term goals are, and how risk tolerant you are. Consider downloading a robo advising app to give this style of investing a try. 

Consider creative investing options

Once you’ve grown your personal savings and long-term investment portfolios squared away and quietly growing in the background, you can focus on having a bit more fun and getting creative with your investing. 

There are tons of ways that interested and engaged investors can find new opportunities. It might be something as simple as buying into your friend’s new small business to help them get off the ground, considering getting into peer to peer lending, or looking for that hot new company that you want to invest in before it goes global. When you’ve got a solid cushion of money under you, you’re freer to play around with your extra investing funds. 

If you’re not sure where to start, it may be worth looking into a professional broker, who can help you strategize, and maybe even identify potentially lucrative investment opportunities. Getting started in investing is daunting at first, but once you start seeing the passive income start rolling in, you’re sure to be hooked!

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