Although most people would like their funds to generate income, only a small percentage decide to invest them, because of fearing any difficulties and limitations. Anyone can become an investor and receive passive income since there are assets where you can Invest a Small Amount of Money.
To help novice investors, below are options for where to invest a little money. So that they work, specifics and pitfalls with various profitable assets, as well as a number of recommendations on the topic.
Where to Invest Small Amounts of Money?
There are many options for increasing money. And everyone can choose the right one for themselves from the calculation of the amounts, risks and potential revenues. Below we will analyze the most tested and popular of them.
1. Invest Small Amount of Money in Startups
There are many specialized services, that allow start-ups to find funds for the implementation of their projects, and it is profitable for investors to invest their money, helping others develop their ideas. Such sites are called startup exchanges.
On them, the investor can evaluate the proposed investment options, estimated terms, and profitability. And then choose the most suitable one for yourself.
Amounts and terms can be very different, depending on the type of business, and the future share of the investor, as a rule, varies from 10% to 80% of future profit. For example, to open an online hypermarket of building materials, a startup will look for 6 million dollars. In the future, the investor will receive 30% of net profit with a payback period of only 1 year. As you can see, there are options where it is profitable to invest a little money.
At the same time, it is profitable to invest a small amount of money. Becoming a full-fledged sponsor of an individual project on a resource can be difficult. Since the number of cheap startups on it is small. Now the most affordable of them requires an amount of 1350 dollars.
However, a huge plus of such services is the possibility of joint investment. Even in the largest and most expensive startup, you can invest any amount. And become one of many investors, between whom profit will subsequently be divided.
2. Invest Small Amount of Money in Bonds
When choosing high-yield bonds, you need to remember the very real probability of default on them, which is why you should pay attention to large issuers with a good reputation and stable financial situation.
Corporate debt securities are not as reliable as government ones, but they are one of the most balanced options for where you can invest little money in terms of profitability and risk.
The market price for them practically corresponds to the face value, which allows you to start investing from an amount of even less than 500 dollars and this is a fairly reliable option where you can profitably invest a small amount of money.
Best High-yield Bonds
According to Investopedia The 5 Best High-Yield Corporate Bond Funds for 2020 are
- Fidelity Capital & Income Fund (FAGIX)
- Vanguard High-Yield Corporate Fund Investor Shares (VWEHX)
- BlackRock High Yield Bond Fund (BHYCX)
- SPDR Bloomberg Barclays High Yield Bond ETF (JNK)
- iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
3. Private Lending (P2P Lending) (Invest Small Amount of Money)
A risky, but quite attractive option. For where it is profitable to invest little money is P2P lending , or the issuance of loans to individuals.
You can turn borrowing into regular investment. There are various services for this, one of the most famous of which is WebMoney and its credit exchange.
To use this service, you must confirm your identity with a personal certificate of service, which reduces but does not exclude the risks of fraud and non-refund.
Of course, lending to private individuals is more expensive than banks, which allows an investor on Webmoney credit exchange to receive income from their investments per month equal to interest on bank deposits for 2-3 years.
At the same time, it is quite possible to start investing with 100 dollars in the account.
Thus, investing relatively small amounts, you can count on a potential income of 100 percent or more per year.
However, this is possible only in theory, since in practice the share of defaults in the total amount of debts reduces profit by up to 50%. Of course, there are risks everywhere and this is not a reason not to do this.
Best Private Lending (P2P Lending) Companies of 2020
- LendingClub: Best for Borrowers With Good Credit
- Upstart: Best for Educated Borrowers
- FundRise: Best for Investing in Real Estate
- Funding Circle: Best for Small Businesses And Big Investors
- StreetShares: Best for Established Small Businesses
- Peerform: Best with No Frills
- Prosper: Best for Originalists
- Kiva: Best for Charitable Investors
4. Digital options (Invest Small Amount of Money)
This method of investing money is considered more likely to be trading than an investment. However, digital (binary) options remain one of the options for where to invest a small amount of money with a lack of funds for more serious investments.
The essence of binary options is to ensure that your condition of the transaction is fulfilled. For example, you think that an asset in 5 minutes will cost more. And if this condition is met, you will immediately receive a profit on the account.
Simplicity attracts many people, but this does not mean that it is necessary to open deals thoughtlessly here. In this case, you trust in fate, the game, the market, and not cold calculations and profitable prospects.
Best Binary Options Brokers
5. Invest Small Amount of Money in Mutual Funds
Mutual Investment Fund sounds scary at first glance. But the mutual fund has a simple basis. Investors deposit their money here. After which the management company manages the money for profit in the future.
Investment in mutual funds is a passive income for which you do not need to work. But today it is a rather outdated type of investment, since the profitability of such funds is relatively low in risk. Nevertheless, leading banks offer to invest in funds with a yield of 5-30% per annum .
Best Low-Fee Mutual Funds
According to kiplinger Best Low-Fee Mutual Funds to Buy in 2020 are
- Dodge & Cox Stock
- Mairs & Power Growth
- Primecap Odyssey Growth
- T. Rowe Price Blue Chip Growth
- T. Rowe Price Dividend Growth
Trading in the stock market can be very easy. You can open deals for many years, or close them on the same day.
This is a great alternative to a bank deposit, as the stock market returns even with portfolio investment are much higher.
The first minimum replenishment at the broker is $ 250 dollars , transactions can be opened with the most minimal lots. It is very comfortable. Even with a small amount, you can collect a profitable stock portfolio here.
Best Stock to Buy
According to fool.com 10 Top Stocks That Will Make You Richer in 2020 are:
- Intuitive Surgical
- NextEra Energy
- SSR Mining
- Innovative Industrial Properties
- Livongo Health
7. Investing PAMM (Invest Small Amount of Money)
PAMM accounts are special trading accounts on the currency exchange in which investors can invest money.
It works like this – a trader opens a special PAMM account and replenishes it with his money. His trading is profitable, and his trading data is publicly open.
The investor looks at the results and decides to invest money in his trade, and the trader will share the profit in half with the investor, on average, the trader takes 30% of the profit.
If the profit is $ 1,000, then the manager will take $ 300 and the investor will remain $ 700
The uniqueness of a PAMM account is that an unlimited number of investors can invest in one manager, and profit is automatically divided as a percentage of the deposit.
Best PAMM Forex Brokers 2020
Investing in sites means active income, not passive, as the site needs to be managed, new content added or advertised.
Even if you want to make a service or a paid service, you need to constantly monitor the performance and attract new customers.
If we talk about small investments, this means that you will need to independently add content to the site and spend a lot of time promoting it, for example, post links to your site on forums and social networks.
But there are simpler ways – for example, to buy a ready-made website and add Google Adsense advertising to it , and then in the passive mode to make profit from advertising.
Profitable sites sell for various reasons – urgently need money for a new project, another more profitable; a person is engaged in creating websites and selling them; the main work of the current owner does not leave time for the development of the site; the site is simply tired of the owner and there is no desire to deal with it, it happens.
You can buy or sell site on trustiu.com
9. Investing little Money in Foreign Currency
This way of investing is a bit like classic Forex trading.
Currency purchases can be carried out both with the help of banks familiar to us and in the terminals of specialized brokers. The largest include Alpari, FxPro – which have been on the market for almost two decades.
Wherever you invest, you will always find out how it works, what it can bring. With currencies just as well. It is necessary to analyze the market situation before investing even small amounts of 500-1000 dollars . If everything is done correctly, then this thousand can be multiplied with only one transaction.
At first, you can invest in the so-called safe haven assets. These are the Japanese yen and the Swiss franc. The latter is one of the most stable. This is a kind of analogue of gold in the foreign exchange market.
Many professional and large traders do not open deals every day but wait for a good moment and open positions for a month or more. This is more like an investment, rather than trading. And the profit here is also high.
Best Forex Trading Platforms to Enter the Game
10. Invest Small Amount of Money in ETF
ETF is an analog of mutual funds. The main difference is that ETFs are sold like stocks and you can buy them from the comfort of your home and sell them at any time. The composition of the fund usually includes baskets of stock indices.
When you buy an SPDR stock, you buy a basket at 500 companies. If you bought these stocks individually, you would need a lot more money.
Now an increasing number of funds are not tied to indices, but tied to the industry, for example, the PureFunds Drone Economy Strategy ETF (IFLY) invests in drone manufacturers. There are separate ETFs for various industries, such as oil, refining, biotechnology, medicine, fast food and so on.
The average share price is 10-40 dollars. By buying one share you get a whole portfolio. It is worth saying that, like mutual funds, these are more long-term investments. Large portfolios reduce risks, but also profitability.
Best ETFs to buy in 2020
Fundamentals of Investing Small Amount of Money
Investing even Small Amount of Money requires compliance with measures that increase the likelihood of profit. Of course, it is impossible to eliminate the risk, but following these tips can significantly bring the investor closer to the goal.
- Investing a free margin. A good investor knows that you need to invest only free, deferred money, which will not worsen your standard of living.
- Having a goal and a strategy. Investing involves analysis and forecasting. It is not worth investing money in any instruments just for the sake of investing them – a good investor should know how much, in what period and on what conditions he would like to earn.
- Discipline. Following your strategy should be mandatory for the investor, although no one will control it. If the strategy says that it is time to sell an asset, do not try to keep it further under the influence of momentary emotions – often such incidents result in losses.
- Reinvestment. The secret to good profit, in the long run, is compound interest. That is why it is better not to spend your profit, but to invest again, expanding your investment portfolio.
- Regular investments. Since we are talking about where to invest a little money, regular investments are the best way to increase your profits. For example, if you save 2000 rubles a month, the investor is unlikely to lose much in quality of life, but it will significantly increase the speed with which his profit will grow.
- Do not stop learning. Keep up to date with events, news, and new promising areas. Only in this way can one be the first to find promising activity and manage to “catch the wave”. As it once was with Bitcoin.
Where Better not to Invest
There are many ways to invest that attract an investor with high returns and quick profits. However, the proverb about free cheese has not been canceled. Consider several assets that are undesirable to invest in.
Various sites that promise 50-90% return per month, while not having a clear concept of why such a return is achieved. As a result, they turn out to be just financial pyramids. Of course, it is possible to make money on such projects, but by no means at all. It turns out, as a rule, only at the very beginning, because, after attracting a certain amount of money, they simply close and all participants know this in advance. The goal is to manage to withdraw the deposit before closing.
For this reason, investing in various hype projects, financial pyramids, money multipliers, etc. permissible only if the investor is aware of the risk and is ready to completely lose all invested capital in a short time. If it is a pity to lose money, even small amounts should not be invested in such projects.
The Goal is to Save or Earn
The choice of an investment asset depends almost entirely on what the investor is pursuing. If he invests the last money to protect them from inflation, it is necessary to choose low-income assets with a minimum level of risk. In turn, the higher the desired level of income for the investor, the more risky assets he must use.
If you save money to buy real estate or another important acquisition, then you should not risk money. In this case, it is better to choose a bank deposit, since only it has a guarantee of the return of invested money even in the event of bankruptcy of the organization – after all, deposits are insured by the Deposit Insurance Agency.
In search of the ideal option where it is better to invest little money, investors often forget that choosing one is not necessary, because even 300-500 dollars can be divided into several different assets. This will help to keep your investments in case one of the investments is unsuccessful and causes losses.