Personal Finance Blog Rotating Header Image

Investing on a shoestring budget

Investing is a term that can be quite perplexing. For some people, uttering the word can be a little paralyzing because it is such a complex word and that you get bogged down by series of jargons. There are so many words that get attached to it like stocks, bonds, forex trading, mutual funds, venture capital, and the list goes on. Investing generally means “to allot a certain amount of money on something and gain something from it in the future”. You invest money to attain a certain financial goal so that you can buy or pay for certain things like a car, a house, your son’s college tuition fee, etc. Investments can be long-term (e.g. buy a house in 10 years) or short-term (e.g. buy a car in 2 years).

Building Your Budget
The most common misconception is that you need to have big money before you can start investing. If you think that you can’t afford to invest, think again. The truth is you can start investing just by saving your pennies. Start with the simplest form of investing, saving. You can start by getting a piggy bank where you can put your loose change at the end of the day. At the end of the month, take the pennies saved from your piggy bank and use them to open a bank account. Next step is to find a bank that can offer you a good fixed annual return rate. Once you have a bank account, you can easily build the budget to do more complex forms on investments in the future.

Safe Investments

If you have long-term financial goals, you can start investing in safer financial management instruments like treasury bonds. You can start by looking for an investment firm or bank that offers low opening balance, low minimum, and low purchases. In this way, you won’t get discouraged early on in your quest to invest a fortune. Most of the time, the high opening balance is a great deterrent to most people.

Another safe investment is mutual fund. Mutual funds are good investments if you are on a budget. This type of investment can make the most out of your investment dollars since your funds get invested in many companies. Your money gets professionally managed as well.

Buying stocks online
Once you have saved enough money for it, try investing in stocks. Start off by opening an account with an online broker that offers low commission rate. There are a lot of cheap online brokers. Buying and selling stocks online can be a real time-saver as well.

Reinvest

When you already have a couple of stocks and bonds in your account, you will notice that some of them are already paying dividends. Even though these dividends may not be that big since you only own few shares, make an effort to reinvest them. Set up your investment account in such a way that the dividends will be automatically invested into the stocks that created them. Over time, you will see how much they’ve grown. You can also enroll in a direct stock purchase plan which allows you to buy fractional shares of stock for you.

There are so many ways to invest on a shoestring budget. You don’t have always to start big. Just take it one step at a time.

One Comment

  1. […] to the point that most people would rather cave in to their comfort zones than make a risk in investing their money in a shoestring budget. Investing has always been about learning to make risks to gain bigger profits. Most often than […]

Leave a Reply

Your email address will not be published. Required fields are marked *