Tag: investing

HOW TO START TRADING WITH SMALL AMOUNT OF MONEY?

HOW TO START TRADING WITH SMALL AMOUNT OF MONEY?

To start investing, you don’t necessarily have to be the world’s richest person living. Many people refuse investing because they think they need to have a great amount of money, as in thousands of dollars, to begin investing. This is totally untrue. In fact you can invest in stocks regularly by saving loose change. Interestingly, you can start investing with an amount at hand as little as $50 per month.

There are several ways to begin investing with a small amount of money, with many online and application-based platforms making it faster and easier than ever. All you need to do is to begin somewhere. The moment you do, it will get convenient eventually.

The key to growing wealth is building good habits, like placing your money away monthly. If you let investing as part of your habit, you will be in a much more robust financial situation down on your way.

Below are some simple ways to start investing with a small amount of cash.

  1. Try the piggy bank method

Investing money and saving money are relatively connected. Basically, you have to save some cash up, for you to invest money. And you can actually do that in very small steps. If you are not used to saving money, you can begin by keeping at least $10 per week. Over the course of the year, it can get to over $500.

You may find piggy bank some silly method, but to tell you, it is often an important first move. Practice the habit of spending a little bit less than you earn and put your saving away in a safe place. Piggy bank’s electronic counterpart is an online savings account. You can withdraw money if you need  it.

  1. Place your money in mutual funds with low initial investment

Mutual funds are investment securities that lets you invest in a portfolio of stocks and bonds with a single transaction, making them the best for beginners.

But the problem is, many mutual fund companies require initial minimum investments ranging between $500 and $5,000. Those minimum amount might be out of your reach, especially if it is your first time to invest with a small amount of money at hand. However, some mutual fund firms will ignore the account minimums if you agree to automatic monthly investments ranging between $50 to $100.

An automatic investment agreement is actually convenient if you can do it through payroll savings. Just ask your human resources department how to set it up.

  1. Paying your debt

There are two reasons for suggesting to pay your debt: firstly, you should not be investing a small amount of money if you have an existing debt, especially debt that is unsecured; secondly, paying your debt is one of the perfect ways to lock in an above average and a definite rate of yield on your money. This is particularly true if the interest charge on your credit card balance is in double digits.

For instance, you have a balance in your credit card of $1,000 with an interest rate of 15.99% every year. By paying your credit card off, you will lock in a nearly 16% amount of return on your money. By surfing the balance to one of the many credit cards with 0% interest, you can make that card go away faster. Through this, each of your payment goes directly to the balance on the card and not to interest, however, this kind of offer may last a limited time so better pay your debt off quickly.

  1. Engage in your employer’s retirement plan

There is a way that you can start investing in an employer-sponsored retirement plan with amounts that are so small you would not even feel them. This is especially a good way, if you are currently experiencing tightening of budgets.

For instance, you plan to invest only 1% of your salary in the employer plan. What makes the investment easier is that the tax deduction that you would get for investing will make the contribution even smaller. The moment you engage to a 1% contribution, you can increase it steadily yearly. If you get a 2% increase in pay, it will effectively be dividing the increase between your retirement plan and your checking account. But, if your employer gives a matching contribution, the arrangement will get even better.

Investing despite the initial small amount of money can grow big rewards. Start with a small amount, afterwards increase as you get more used to the process.

BASIC RULES TO REMEMBER IN INVESTING

BASIC RULES TO REMEMBER IN INVESTING

Investing is like a game, it will require you to understand and master the rules to get into success. This is important especially for beginners in investing. For beginners, investing starts with an understanding that every price is determined by supply and demand.

Hence, we should understand that regardless of how young or old you are, learning the basics in anything is very important. Most people take lessons to master the process of doing a certain thing. Unfortunately, most people never learn the simple basics of investing before investing their hard-earned money.

The following rules are the basics which you have to remember about investing.

Basic rule #1. Understand the kind of income you are working for

Most people think is just to make money out of investing. They don’t come to think that there are different kinds of money to work for. There are three kinds of income, and they are as follows:

Ordinary earned income

            This is basically and generally the money you get from a job via a paycheck or payslip. It is the highest-taxed income, thus, the hardest to earn and build wealth  with.

Portfolio income

            This is derived from paper assets such as stocks, bonds and mutual funds.

Passive income

            This is derived from real estate, royalties and distributions. Compare to ordinary earned income, it is the lowest-taxed income, with many tax benefits, thus, it is the easiest to earn and build wealth with.

Basic rule #2. Transform ordinary income into passive one

Most people begin their life out by working for ordinary earned income as, of course, an employee. The way to establishing wealth, then begins with understanding or knowing that there are other types of income as resourcefully as possible.

Basic rule #3. The investor is the asset or liability

A lot of people think that investing is a dangerous thing. The reality, however, is that it is the investor who’s dangerous. Understand that the investor is the asset or liability. There are investors who lose money while others are making it. That is, in fact, a good investor love to run behind a dangerous investor because that is where the real investment bargains can be found.

Basic rule #4. Always get prepared

Most people try to anticipate what and when things will happen. But a real investor is always prepared for anything that can happen. If you are not prepared enough with everything around you, a great opportunity will pass you by. Always remember that it is now important to anticipate what will happen. Instead, focus on your own, on what you desire, to keep your eyes open to what is happening, most especially, to respond to every opportunity that passes you by. This can be done through continuously educating yourself and applying your knowledge.

Basic rule #5. Great deals attract money

One of the biggest concerns you might have as a beginner in investing is how would you raise money if you found a great deal. The thing goes with the previous rule. Be prepared, educate yourself and gain experience. With that, you can find a great deal, the money will find you or visa-versa, you will find the money.

Why Investing is Important?

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Warren Buffet once said, “Never depend on single income. Make investment to create a second source.” Buffet is an American business magnate, investor and a philanthropist. He is also known as one of the second wealthiest person in the United States having a total net worth of $78.7 billion. He developed his fascination in business and investing during his youth.

 

Another amazing quote goes like this, “Anyone who is not investing now is missing a tremendous opportunity.” This was stated by Carlos Slim. He is like Warren Buffet – a business magnate, investor and a philanthropist. Back in the years of 2010 to 2013, he was ranked as the richest person in the world. He always wanted to be a businessman and began investing at a young age.

 

They are just two of the richest people known in the world. Now, what do you think is their common denominator? First, they are fascinated with the workings of the business world. Second, they began investing — and not just investing, they began at an early age.

 

Why investing is important?

 

Imagine working your whole life for an employer. You might be doing well at the moment – getting raises each year, progressing with your career, having the means to buy a house and a fine car, going to vacations every year, eating out with your family and enjoying the good things in life. However, you get old and your skills deteriorate. You might be able to save some money for retirement, but do you think it would be enough to get you through old age?

 

When you do investment, you let the power of compounding interest aid you while you save. Thus, you start by slowly accumulating your wealth over time. It is not just a scheme in getting rich quicker, but a time tested method proven to be true and advantageous by billionaires like Carlos Slim and Warren Buffet.

 

What are the benefits of investing?

 

  • You are being given the means to use during cases of emergencies

 

Financial crises are a part of life. There are times that you just are not or cannot be prepared about everything. If you were hit by startling circumstances, would you have the means to make it through that period?

 

With investing, it is like you are creating a financial cushion where you can bounce once life has dragged you down unexpectedly.

 

  • You are making yourself financially secured.

 

This is somewhat analogous to having yourself build a large cash reserve. Financial security depends on how much you allot for your investment. Building large cash reserve may mean lessening your future financial anxiety and becoming more empowered in the future.

 

  • You are giving yourself the chance to fulfill your financial goals.

 

You might be dreaming of buying a big house, a nice car, finance your children’s education as well as fulfill other goals written on your bucket list.

 

  • You are creating your own wealth.

 

There are various investment options that help you out to grow your money in a couple of years.

 

  • You are preparing yourself to fight inflation.

 

Inflation is like a savings-eating monster. Every year, prices keep on rising. With investment, it helps you protect your funds against inflation.

 

Conclusion

As the old saying goes, “save for a rainy day,” but since that is an old saying, it does not apply anymore in today’s situation. Investing is a proven way to help build your wealth rather than purely saving. It helps you expand your capital. Now that you have seen the importance of investing, getting started should be the next step. The choice is left to you. Do you think that going for that choice would let you enjoy the consequences later on?

 

BWorld is here to help you reach your goal of becoming expert in the field of investing. We can help you learn, practice and master the art of investing. For further questions regarding online trading, commodities, stocks, technology, and economy – feel free to reach us here. We hope you will continue your trading journey with us. Let’s get started!