4 Tips for Investing on a Small Budget
If you’d like to start investing but think you don’t have enough money you’re not alone. In fact, more Americans own cats than stocks. But, if you’d like to become an investor, know that now is a perfect time. The stock market is currently very strong and has been for the past few years. So, there no reason to let low income stop you from growing your wealth. Here are 4 tips on how to get started.
1. Automate Your Investing
The best way to invest if you earn a low income is using your 401(k) plans. If you don’t have one, we’ll get to that later. A good start to investing is to automate your payments, much like you would to a savings account or to pay a utility bill. Choose a specific amount of money, even if that just $20, and set it to automatically invest every month on a day of your choosing.
To invest, you might need to change your mindset, you have to value it as much as paying today’s rent or phone bill. You need to tell yourself that your future is a priority. This should come before entertainment expenses like eating out or going to the movies.
2. Increase Your Investment Contributions Gradually
There are quite a lot of companies out there who will make it easy for you to invest with little money. Some of the best include Ally Invest and Betterment. Both have no minimum balance requirement, so you can start with as much or as little as you’d like.
Once you’ve set up an account, make sure you increase your contributions gradually. Set reminders on your calendar every 3 – 6 months, so you don’t forget to contribute. If you’re not sure that you’ll have enough money to make extra contributions, it could be worth starting a side-gig to help you. Additionally, cut down on your spending, and save any extra money you come across. Again, it’s down to your mindset. Once you’ve cut out frivolous spending, you’ll be able to find more money in your budget.
