5 ways to invest with small money
by: JOHN DOE
on: JULY 4, 2022
in: BLOG
Are you a beginner looking to put your money to work and potentially build wealth? Well, the truth is that when it comes to investing, we all have to start somewhere.
The hardest part of starting an investing journey is the “capital” factor. When there are a lot of other factors like food, transportation, and unexpected bills competing for your limited resources, it can sometimes be difficult to take out money and start investing. But it is a good thing you’re here.
A lot of young people in Nigeria, like yourself, often assume that to invest, you must first be wealthy, affluent, or at least a money guru but that’s false. Anyone can start their investment journey today with as little as N1k and no prior investment knowledge.
Looking at today’s inflation rate, we can all agree that having a savings account only is not enough. Saving money is important, but it is only part of the story. You may need to start considering whether you want to invest for the long term or short term.
Short-term investing implies that you might require your cash back with returns in the nearest future, meanwhile long-term investing implies that you are willing to sacrifice more time. Either way, the investment market is accessible to both approaches to investing.
So, how do you start investing with as little capital as possible? Here are 5 ways;
1. Invest your money in little amounts over time
The days of waiting until your “Kolo” is full before converting it into investments are over.
Contrary to your beliefs, you don't need large amounts of money to start investing. In fact, investing small amounts of money regularly is better than investing a large lump sum in one go.
Making regular investments rather than huge lump sums can work in your favour, thanks to a technique known as Dollar cost Averaging. According to investopedia, Dollar-cost averaging is an investment strategy that entails investing the same amount of money in a target security at regular intervals over a certain period of time, regardless of price.
Through our automated investing choices, we at i-invest are eager to support your efforts to invest more regularly and make it simpler to manage volatile markets.
2. Short-term investments are good but long-term investments are better
Yes, short investments are beneficial for a variety of reasons. Some of them are that they are safe, take on lower risk and allow better liquidity for use in the near future. In fact, setting aside a small amount of money every month for investment may not seem
significant but imagine you set money aside for investment every month for the next 10 to 15 years.
That is the power of a long-term investment. Investing for the long term implies that you
have more time to ride out the bad times as the economy fluctuates and inflation spikes
come and go.
If you can afford to set out a small amount of money every month for the next couple of
years, you may just be impressed at where this investment journey may take you.
3. Find the simplest thing to invest in
When it comes to investing, we need to talk about the importance of diversifying your
portfolio by going after the simplest and safest vehicles of investment. At i-invest, your money has a range of simple, safe and secure investment vehicle options including Treasury Bills, Equities, Fixed Deposits, Etc.
4. Make a budget
Ever heard of the 50-30-20 rule? The general rule of thumb is to allocate 50% of your monthly after-tax income to needs, 30% to wants, and 20% to savings or debt repayment.
You may make better use of your money by consistently maintaining a balance between
three key areas of expenditure.
You can then develop a long-term investment strategy that enables you to invest with confidence and clarity about your future.
5. Start NOW
According to Warren Buffet, the best time to invest is several years ago. The second-best time is now. You shouldn’t have to wait until your savings are in order before you open your i-invest account and start investing with the little extra funds you have now.
In the past, it was more difficult to start investing, as there was almost a requirement to have X amount of money available to make your initial investment but these days, all you need is a smartphone and very little money upfront.
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