We all know we’re supposed to invest in our futures, whether it’s for retirement or even a rainy day.
But what if you don’t have a lot to invest? Well, the good news is, investing just small amounts of money can still go a long way towards planning for your future.
Today, we’re not looking at saving up thousands of dollars and then deciding how to invest it; we’re talking about investing your day to day savings of amounts between $100 and $1000. Remember – there’s no shame in starting small.
1 – Pay Off Your Debt
This isn’t the most enticing option to share with you, but it is essential to get it resolved first. Don’t invest small amounts of money into new investments when you have existing debts. After all, working towards paying no interest makes a lot more sense than spending more on interest and having a small investment.
One option to make your credit card debt disappear faster is transferring it to another card that offers 0% interest for a certain amount of time. Then, make the most of no interest by throwing all your loose change at it.
2 – Invest with Your Bank
While banks won’t usually give you significant return on investment, the good news is there is practically no risk of principal loss when you put money in a term deposit. That means, it will grow slowly, and you can be assured of your return. And while the interest you’ll earn won’t be astronomical, it will be higher than your average interest-bearing savings accounts, because your funds are fixed for an agreed-upon term.
Make sure you won’t need access to that money within the fixed-term, whether for emergencies or because you may want to invest in another opportunity. If you withdraw early, there is a penalty, which of course reduces the worth of your investment.
3 – Invest in Your Skills
You can invest in yourself by upskilling for your current career path. You can often pay just a few hundred dollars to learn a new skill to add to your resume, but you can also supercharge the way you work.
For example, you could invest some of your spare time into improving your attention to detail by doing some user-experience testing. Then, apply that to your current job. Outshine your colleagues by maximizing the quality of your output and watch that promotion roll in. Check out this article to learn how to make money online in a massive range of focus areas.
4 – Sign Up to Motif
Motif is an online trading platform that is concept-driven. That means you can align your investment strategy with your values or your interests by investing in “motifs” ranging from clean technology and biotechnology research through to robotics and cryptocurrency.
It’s a great option for investing your day to day savings, with a minimum investment from $300 for a motif, and a commission fee of $9.95 per motif trade. You can even build your own motif if you desire.
5 – Contribute to Your Employer-Sponsored Retirement Plan
Why not invest in something that’s already in place and working toward your future? That’s right; we’re talking about an employer-sponsored retirement plan or superannuation fund (though be careful about rolling over all your super into one).
Simply arrange a salary sacrifice, to reduce your pre-tax salary by a small amount of your choosing which is contributed to your retirement fund, along with your employer’s compulsory payments. While there is a cap in place, in general, you’ll be taxed at a lower rate for these contributions, while also growing your retirement fund.
6 – Try Dividend Reinvestment Plans
If a company allows a DRP, it means that shareholders can increase their investment in that company by automatically reinvesting their dividends into new shares, rather than receiving the cash for those dividends.
The benefit of it being an automatic arrangement is that you don’t pay any brokerage fees or transaction costs, so it’s a very cost-effective option. It can sometimes be done by payroll deduction which makes it even simpler to maintain.
7 – Use Prosper
Prosper provides a platform for you to invest in the personal loans of credit-worthy borrowers. It offers low-cost access from just $25 per investment, making it very affordable for entry-level investors.
While there is a significant return on fixed-rate investments (up to 14% on higher risk investments), it’s important to consider that unlike bank investments, there is no security on your principal should a loan go into default, with no FDIC insurance protection.
8 – Invest with Brokerage Firms Online
Investing with an online brokerage firm gives you access to a vast range of investment choices from stocks and bonds to mutual funds, futures and CDs. This makes it a good choice if you want to try a few different options to gain some investing experience.
Some firms have a minimum spend of up to $1000, but TD Ameritrade doesn’t have a minimum deposit requirement for opening a new account.
9 – Betterment
The unlimited professional advice and free account rebalancing are what makes Betterment stand out as a “robo advisory” online investment platform. Based on an online questionnaire, they generate several portfolio options for you to choose from.
There are no complicated decisions to make regarding the selection of investments – just fund your account from as little as $100 per month and go. They also have low fees on digital accounts starting from 0.25% of your account balance.
10 – Invest in Your Own Business
With just a couple of hundred dollars, you can use a skill you already have to start your own business and generate some side income. Invest in some business cards, set up an email address, even a cheap website – and away you go! Consider these options:
- affiliate sales on a blog
- basic lawn maintenance
- buying goods at flea markets and garage sales and selling them on eBay or Craigslist
- basic administration services like typing and data entry
- creating resumes for people
- consulting in your area of expertise
The key is to start small, invest smart and watch your investment grow over time. Who knows – play your investment cards right, and you could be on your way to retiring early!