It surprises some people to learn that anyone can make a starter investment, regardless of how much cash they have on hand. The first step is as simple as consciously thinking about your financial goals. Having specific targets makes it more likely you will make sacrifices if necessary as well as keep you on track towards meeting them.
Focus on Saving First
It can be easy to get sidetracked or feel overwhelmed with the rate of return on certain investments. However, building up the funds to invest in the first place is much more important. You will get further ahead by saving more at a lower rate of return than you would be putting off savings until you see a rate that you like better. Remember that your return rate will be higher the more money you save for investing.
How can you save money when you don’t have much to spare? It will likely require some sacrifices such as living below your current means. Some ideas to consider include:
- Renting a room in your home or getting a roommate
- Buying in bulk or shopping only during sales
- Driving an older car with good gas mileage
- Eat at home instead of restaurants
- Comparison shop for larger expenses such as cell phone and car insurance
If these sacrifices are uncomfortable, remind yourself that they’re only temporary until you have at least a few hundred dollars a month to put towards investing. Remember that it doesn’t take a lot of cash to start and that any amount of investing can make a significant difference in your life.
Create at Least One Additional Source of Income
The Internet has made it possible to earn money in a variety of industries on your own schedule. That means you can start building additional income even if you already have a full-time job. The key is to build scalable or passive income rather than something you must repeat continually to earn the money. For example, you could publish an eBook or start a small business. Be sure to save the money you earn from additional income sources for future investing.
Get Rid of Your Debt
Nothing will cripple your efforts towards saving and investing than paying hefty interest payments on debt every month. If you’re already in debt, work on paying the smallest balance first until only your home and/or car remain. This will require you to take in additional income as discussed above. It wouldn’t make sense for you to start investing money while still make debt payments with large interest attached each month. Focus on eliminating the debt first and building future wealth second.
Start by Investing in Retirement Savings
If your employer offers a 401(k) or similar retirement savings plan, be sure to participate in it. You not only receive an immediate tax deferral on your contributions, many employers contribute a set percentage toward retirement savings from each paycheck. Opening an Individual Retirement Account (IRA) with a local bank can be a good option if you’re self-employed or your employer doesn’t offer retirement savings. Any type of retirement savings is an investment in your future.
Aura Wealth Advisors is here to offer help with your starter investment. Please contact us today to request an appointment.