If you are starting in the investing business, you may be confused about what you have to do and where you have to start.
You don’t have to worry because this article will help you learn more about investing and give you a few tips on where you can begin.
Since you are a beginner, you could always start by investing in small amounts. Don’t think that only men in business suits are the ones who can invest.
You don’t have to be one of them to start investing.
It’s easy to invest your money in something. The tricky part is figuring out what you are going to invest in.
Even though you are not fond of looking at ratios and charts and studying them, you can still prove yourself to be a good investor.
So long as you start early and move in the right direction, you will be able to invest your money and reap the rewards.
Here are seven tips on investing your first $1,000:
#1: Start with a cookie jar
Before you can start investing your money in something, you need to have money already saved up. One way to start saving money is by putting away a specific amount per week.
You can place this money in a container of your choice. It could be a cookie jar, an envelope, or even a savings account at your bank.
An online savings account can be separated from your checking account so that you can only withdraw money from it within two business days.
The account isn’t linked to your debit card, which means you are less likely to use it to buy something frivolous.
#2: Dip your toes in the stock market
The stock market may seem like a scary place to venture out to, especially if you’re not familiar with terms such as bid, volume, ask, shares, yield, etc.
Thanks to the rise of digital technology such as the Internet, it is easier now more than ever to invest in the stock market.
You can start with a few dollars to get the hang of it before making a more significant commitment. By risking only a little money, you can already see how rewarding it can be.
#3: Let a Robo-advisor do the investing for you
A Robo-advisor is a service that needs little human interaction and uses a computer algorithm to build and manage your investments.
They usually ask you a few questions so that they know what your goals are and how high you’re willing to risk your investment.
After that, Robo-advisors will start investing your money in a multitude of low-cost stocks and bonds. The algorithms they use allows them to rebalance your portfolio and optimize it for taxes.
The minimum amount you have to pay for a Robo-advisor is about $500, and the charges for taking on the service are only a small portion of your overall balance. They usually charge 0.25%.
So, if you invest $1,000, that means you will only have to pay $2.5 a year in Robo-advisor fees. $1,000 may not seem like much, but given time and other balances along the way, it will start adding up eventually.
#4: Try out the real estate market
Real estate crowdfunding has made it easier to invest in real estate. You can now own shares from properties without having to go through the headaches of becoming a landlord.
Compared to a Robo-advisor, you need to have a little more money to get into real estate crowdfunding. If Robo-advisors require a minimum of $500, real estate crowdfunding can set a minimum of $5,000 instead.
The real estate market is a little riskier because your starting balance is not placed across hundreds of individual investments. Instead, it is all placed in one property.
However, real estate crowdfunding allows you to share these risks with other investors since you are all investing in the same property but with different shares.
All of that, and you don’t have to do any paperwork or property maintenance.
#5: Trade cryptocurrencies
Cryptocurrency is a digital currency you can use to buy goods and services through online transactions. These services and goods are often traded for-profit, and since cryptocurrencies are unregulated, prices can rise quickly.
Unlike other investment opportunities, investing in cryptocurrency trading requires prior knowledge of what you’re getting into.
Platforms such as Teachable, Kajabi, and Udemy offer courses for cryptocurrencies so that you can get the hang of it before diving into cryptocurrency apps.
#6: Place your $1,000 in a retirement plan
If your employer offers a retirement plan, then you could place your $1,000 in that plan so that you can start preparing for your future.
Most employer-sponsored retirement plans offer to take 1% of your salary each month and place it in your retirement plan and slowly increase it to 2% to 3% as the years go on.
The tax deductions you get from these contributions are definitely worth your while. Time your retirement plans right, and if possible, make an increase in your donation when you are getting a pay raise.
#7: Pay down your debt
It may sound weird to consider paying your debts as an investment, but if you think about it, the higher your debt is, then the more money you are left to pay back thanks to interest rates.
In this case, you are investing money by avoiding those extra interest fees and, at the same time, shaving off $1,000 from your debt.
Paying down your debt before investing allows you to invest and keep any money you earn because most of the time, interest on repayments can cost more than what you make in a first-time investment.
Conclusion
Investing in something can be scary. That’s $1,000 of your money that you could lose. But the greater the risk, the better the potential.
By making the right investments in suitable portfolios, you will be able to reap the rewards and make that risk pay off.
You can always start with small investments, but you may be ready to reach for more significant investments once you get the hang of it.
