If you’re like millions of other hardworking Americans, you’re probably wondering how other people with similar wages and lifestyles find money to invest while you’re having trouble simply making ends meet. You may have similar wages and family sizes, but it’s what you do with your money that counts.
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Perhaps it’s more accurate to conclude that it’s what you don’t do with your money that makes the real difference in being able to invest or not. The truth is, anyone can be an investor if you understand how it’s done. If you’re looking for a way to invest in your future and grow your wealth, the following tips can help you learn the secret to success.
Taking Charge of Your Budget Is of Primary Importance
The very first rule you need to learn is that your income must always exceed expenditure. At this point you’re questioning just how to do that when you’re already spending every penny you earn keeping a roof over your head, food on the table, and clothes on your back.
Could it be that you’re paying high interest rates on credit cards you used for those ‘little extras’ you thought you wanted but didn’t really need? If so, it’s vital that you find money to pay them off in full.
There are always things you can cut from your budget and if you begin saving a little at a time, you’ll be able to pay those cards off sooner than you think. However, don’t forget to cut them up and stop using them immediately or you’ll never get out of the hole you’ve dug yourself into.
Utilize Managed Investments
Managed funds are commonly used by people who either don’t have lots of money to invest or don’t have the time and expertise to properly manage a diverse portfolio of investments. By investing in a managed fund like an exchange-traded fund (ETF), you’re essentially pooling your money with many other investors who contribute to a collective portfolio that’s professionally managed.
Allocating the research and decision-making to an experienced broker allows you to gain a relatively reliable return on your investment, typically with a lower risk than you’d face if you managed your portfolio independently. This approach makes sense when you’re on a shoestring budget because you probably don’t want to spend hours researching when you’re only investing a small amount.
Conversely, if you have a generous budget and tons of time on your hands, you might be better off studying the sweet science of investing to manage your own fund. You can hone your investing skills and become more knowledgeable by subscribing to updates from the Money Map Report, which according to most of the Keith Fitz Gerald reviews found online, is one of the more popular and accurate newsletters in the investing niche.
Work for an Employer that Provides a 401(k) Plan
Perhaps the easiest hands-off way to become an investor is to simply start working for an employer that provides a 401(k) plan. With this kind of investment account, money from your check or salary is automatically transferred to a 401(k) account that operates as a private investment portfolio which you have control over.
The typical 401(k) plan will let you invest in money market products, stocks, bonds, and mutual funds. Most investors choose to favor target-date funds – stocks and bonds that are gradually invested in more conservatively as you approach retirement. Your employer will usually partner with an administrative investment firm like Vanguard to help you oversee and manage your 401(k) portfolio within a user-friendly online platform.
The coolest part about using a 401(k) to invest in is that most employers will match your investment amount. So, if you decide to allocate 4% of your $60,000 annual salary, which is $2400, then your employer will also contribute $2400 for a total annual investment amount of $4800.
If you were to do that for 20 years, you’d be investing $96,000 in your 401(k), with only $48,000 of that coming out of your income. As a result, you’ll have a retirement fund that at a bare minimum will be twice what you invested, and with returns factored in, could be higher than $120,000 in the above scenario.
Consider Online Investments
There are a plethora of ways to make money online, and with the right content and marketing campaign, you could build a reputable brand that generates enough revenue to allow you to quit your job years ahead of schedule. You can even buy pre-made online businesses on sites like Flippa if you don’t want to deal with the hassle of hiring a web developer or doing it yourself.
Once you have a website that’s generating a decent amount of monthly traffic and ad revenue, you could turn around and sell it for a lump sum return. Sites typically sell for 24x-36x the amount of monthly income they generate, so a site that earns an average of $150/month could be sold for $3600-$5400.
Buy Stock with Strong Growth Potential
Finally, the best bonus tip we can give you if you’re a new investor with a limited budget is to look for trending and emerging stocks that have the potential for massive returns. Such stocks are typically related to companies that can disrupt industries in the near future.
Common examples of stocks that have exceeded expectations in the past include Amazon, Tesla, and Apple. Try to spend some of your spare time looking for the “next big thing” on the stock market and it could pay off big in the long-term.
The Importance of Tracking Trends
In closing, being a good investor is all about staying top of the latest trends and world events. By keeping an eye out for products, services, and topics that have high potential, you can discover new investment ideas and jump on them early while the stock price is still low. Of course, “buying low and selling high” is the name of the game, so the earlier you can get in on a trend, the higher your returns will be in the long run.
