It is true that taking the first step towards investing is the biggest challenge. With lots of investment opportunities available online can be troublesome for most of us. Too much information can be confusing. Right? In this article, we will try to guide you with various investment options.
If you’re new in the investing world, you must be aware of the risk factor behind the investment scheme you’re choosing. In the financial world investment options have been categorized into three categories; High risk, medium risk, and low risk.
You’ve probably heard that investing is important. And is the best way to grow your money. But due to impulse buying behavior, most people spend their money on useless stuff. This does not add any value to their life. What is investing and how to start investing money?
The goal of investing is to put your money to work for you. In return, the money will grow if the asset you’ve invested performs well. However, it involves risk.
Interestingly, keeping your money into the savings account in a bank also involves risk. The bank gives a lower interest rate on your money (depending on the country) and inflation rises every year. Which at last turns out a loss for you. Some investment options come with low risk; with others the risk is high. The higher the risk, the better the rate of return.
5 Ways to Start Investing with Less Money
You can start investing with as low as $5. Suppose, you’ve invested $5 and it gave you a return of 100%, which means it grows $10. It’s not a lot! To start with, it is recommended to start investing with $50-100. Here are some ways to start investing your money:
1. Stocks and Mutual Funds
The most traditional way of investing is to invest in the Stock market. A stock market is a place where investors buy and sell shares in public companies. By investing in stock you get a share of the company you’re investing. To invest in stocks, you need to have an investing account. Stock brokerage firm can help you to start the process.
Stocks, mutual funds and ETF (Exchange Traded Funds) are the good investment options to start with. It is less risky and more government-regulated than any other option. However, the risk is still involved if you’re not doing proper research of the market.
2. Bonds and Treasury Funds
Investing in bonds and treasury funds are the most common way to grow your money. Bonds are treasury investments are the good options if you want to go long. You might have received savings bonds when you were a kid. Savings bonds are investments in debt issued by the US Government.
Bond investment is like lending money to the government and in return, they pay you interest. According to Morningstar investment researcher, since 1926, large-company stocks have returned an average of 10% per year, while, long-term government bonds have returned between 5- 6%.
Different types of bonds you can invest are:
- Sovereign Government Bonds
- Municipal Bonds
- Corporate Bonds
If the above option sounds confusing to you, then RoboAdvisor might be the right choice for you. RoboAdvisors is an investment advisory firm that automatically manages your money and invests in equities.
RoboAdvisor is an Artificial Intelligence-based investment trading option. Thus, more automation, less trading fees and easy to manage your money.
Commodities involve investing in raw materials that can be categorized into hard commodities like oil and gas, and soft commodities that are grown, such as crops and livestock. When you invest in commodities, you deal with the supply and demand of a particular commodity. The market completely depends on supply and demand. Thus, understanding of the global market plays an important role while investing in commodities.
Investing in Cryptocurrencies are the most volatile option to invest your money. Some became a millionaire by investing in cryptocurrencies at the very early stage, while others lost all the money in the crypto market.
Cryptocurrencies gained fame during the massive price hike during the years 2017 and 2018. With a 10x return on investment in a year, investors from all background gets attracted to this investment option.
If you are new to the world of investment, cryptocurrencies might not be a good option for you. As cryptocurrencies are not regulated by the government. So the value is based on other’s temperament to use and trade the currency. Bitcoin, Ethereum, Litecoin, Monero, and Ripple are some of the top cryptocurrencies to invest your money.