In the last few decades, the rich have gotten richer and the poor have gotten poorer. The reasons for this trend are both local and global, and are related to the fact that money breeds more money. This being said, however, there is no reason that those on the lower spectrum of wealth cannot take advantage of many of the same money-making tools as the upper class. Financial investments in savings accounts and the stock market are not limited to those that already have mass amounts of money but can and should be used by everybody to better their financial standing. With even as little as $500, you can make an investment that can value ten times as much in a few years. Here are a few tips that the average- earning person can use for making money using the same financial instruments as the rich:
Know Your Financial Situation And Goals
The first step towards investing is to realistically understand your family’s financial situation. Think about how much liquid money you have at your disposal (that which is not tied up in a mortgage, car payments, etc.) and what sorts of big spending you will need to do in the next few years (buying a car, education payments, etc.). How much do you have to invest? Again, you do not need massive sums of cash to invest. If you had invested $500 into a Cash Investment Account (CBA) twenty years ago, your investment would be worth roughly $20,000 today. Plan for the future – are you saving up for a house, your kids’ education, or retirement? Different sorts of investments cater to these needs. Being able to see the big picture of your financial situation is essential to understanding how and where you should invest the little spare cash you have wisely.
Once you have understood your financial situation and have pinpointed your goals, make the best investment for your budget and situation. If you have less than $500 to invest, you should probably save up for a bit longer as most investment processes cost a small fee. This fee is usually negligible, but can actually eat up a significant part of smaller investments. Even having between $500 and $1,000 to invest can be more lucrative. With this amount to about $10,000, it is a good idea to look at investing in exchange traded funds. These funds allow you to take part in a grouping of investments in traded stocks, usually those ranked in the top 200 of S&P’s listing. By putting your investment in an exchange traded fund, your investment portfolio is well diversified and therefore protected against any big losses from individual companies. With this much money you can also invest in individual stocks, but this would be more risky (although it could result in a higher payout). Again, think about your situation before deciding whether a safer exchange traded fund or individual stocks are best suited for you.
You can make money through investments with even as little as $500. Unless you get extremely lucky and invest in a company whose stocks rapidly increase, you probably will not see a huge payoff for this investment immediately however. Investments pay off over time. Make sure you understand this truth and are ready to leave the invested sum in its investment for at least a few years. If you would like to see faster cash, you can try using companies like Compound Stock Earnings to help you earn cash on the investments you make (without selling them) through covered calls. Understanding the options available to you is key to making smart investments of any size.
Investing allows you to let your money make money for you. Anybody with a little extra cash can begin investing immediately by understanding their unique financial situation, doing their research, and being realistic about their possibilities. Don’t wait any longer to being making money! For more tips on investing with limited cash, see USAToday.