It might seem like an odd concept – surely if you’re on a budget, you won’t be thinking about investing what little money you have? It’s true that considering investments wouldn’t be at the top of your priority list if you were really struggling financially, or had debts to cope with. However, millions of people are getting by on modest means but looking for ways to increase their income, and investing can be a viable option if you approach it in the right way.
Deciding if investing is right for you
If you make good choices and don’t take unnecessary risks, you stand to gain more from investing than by leaving your cash in the bank. Interest rates are currently very low, and show no signs of increasing significantly any time soon. That means the returns on savings are correspondingly low too, which makes investing a more attractive prospect. However, there is always a level of risk involved in making investments, no matter how secure the stocks, shares, or other markets might seem. Therefore, it’s essential that you don’t invest more than you could stand to lose.
Investing in major companies
Many big companies have shares valued in the hundreds or thousands of dollars, which would seem to put them out of reach of investors on a budget. However, you can purchase fractions of shares starting at around $25 using a specialist brokerage firm; in effect, a share in a share! The appeal of this kind of investment is that your money will be reasonably safe, because the businesses concerned will have proven track records and be doing well, with good prospects for the future. The profits may be slimmer than if you were able to take a chance on a new company whose performance then showed dramatic improvements, but you would be taking less of a risk and could be fairly confident that you would make some reasonable gains overall.
Cheap stocks and shares
The lower end of the scale is that of the penny market, which in fact includes all shares trading at under five dollars. Some will be businesses that don’t have much of a history, others may be bigger businesses who are yet to show significant profits due to the large start-up costs – Amazon operated for many years before starting to make money. If you’re considering purchasing these low-cost shares, have a look at the top penny stocks to buy as advised by knowledgeable financial services websites, before selecting your investment. If you keep a close eye on developments, you might be able to purchase shares in a company just before it takes a major step forward in success and profitability, but again, never invest more than you could afford to lose.
Investing isn’t just for the wealthy. You can start with a modest sum, and gradually increase your fund’s value until you’re making a decent return. As long as you aren’t gambling with money that you need for your living expenses, watching the rise and fall of the stock market can be an exhilarating experience, and even if you don’t make a fortune, you’ll still have some fun.
