For most people, the word “investing” is quickly conjured with fancy money-making figures. This might be a picture of stock-market transactions, doing business in Wall Street, or sitting in front of the computer all day trading foreign currency. Indeed, Wall Street-style investing is intimidating, especially if you are already doing other things in your life.
The truth is that investing may not be that difficult, and should never be daunting. There are so many types of investments, and taking advantage of these opportunities can give you great rewards. You don’t have to be a financial expert to start them either.
As they say, the key to building your wealth is developing good habits. This can be done by simply putting money away into a separate savings account (or even a piggy bank). Swapping out your barista-made coffee for a coffee at home can help you save a significant amount of money each month.
Once you have enough seed or capital money, you can quickly start investing. Fortunately for you, there are countless ways to invest in 2020. You can quickly do many of them using just your smartphone.
So how and where can you invest your hard-earned money? Here are four investment ideas for first-time investors.
1. Try Real Estate Crowdfunding
Another good way to get into real estate investing without spending a huge amount of money is through real estate crowdfunding platforms. Crowdfunding platforms like Fundrise, lets you earn through quarterly dividends and appreciation in shares’ value.
These returns come from the different real estate assets you have in your portfolio. These are the rental income or interest collected, and potential appreciation of the property. In other words, you will be a shareholder and will be entitled to a pro-rata portion of the returns.
You can invest for as little as $500.
The platform’s fund managers will take care of your investment for a fee of 1% of your investment. There are plenty of opportunities to get your hands into real estate investing such as the new developments at Precondo. Whether you have big or small investment, the income potential with real estate is quite promising.
2. Start Your Way with Low-Capital Mutual Funds
Mutual funds provide a great avenue for first-time investors to start and build their portfolio of bonds and stock. It is a perfect choice for first-timers. Investors also have the choice to diversify their stock market risk down the line.
Though not considered as overly lucrative, mutual funds still represent quality returns. The challenge with mutual funds, however, is that many companies require an initial investment that ranges from a few hundred dollars ($500) to thousands of dollars ($5000).
For first-timers on a tight budget, these minimums can be tough to meet. However, there are many companies out there that sell investment products for as low as $50 to $100. Some companies offer automatic investing arrangements, where the payments are taken from the monthly payroll of the investor.
This means you can set up an automatic deposit from your payroll account. This may not mean much, but as said earlier, it’s a good way to build a good habit of setting aside money each month. You can ask your human resource department about this.
3. Want to Play It Safe? Try Treasury Securities
Not a lot of small and first-time investors do this, but you can. Securities may not make you extremely rich, but it’s another good way to set your money aside. You can earn interests until you are ready to risk higher (for higher return of investment) in your investment journey.
Also known as savings bonds, treasury securities are easy to acquire through the US Treasury’s bond portal (Treasury Direct). You can choose fixed-income US government securities with maturities that range from 30 days up to 30 years. They are available in $100 denominations.
Also, you can purchase Treasury Inflation-Protected Securities (TIPS) from Treasury Direct. This type of investment pays interest and makes adjustments to your principal based on the inflation changes in the consumer price index. As with mutual funds, you can fund your account in Treasury Direct using your payroll savings.
4. Try Real Estate Wholesaling!
House flipping is one of the most common ways to earn money from real estate. However, the money needed to purchase a property, repairs, and putting it on the market can be out of reach for most newbie investors. If you’re willing to get into real estate, then you can try the alternative called real estate wholesaling.
In real estate wholesaling, investors get the property under contract and at a discounted price. Then, they can sell the contract to another investor for a profit. This means you don’t necessarily own the property, which negates the hefty amount of money needed for down payments and/or loans.
Wholesaling can give you a profit of $5,000 to even up to $10,000 per sale when you get the right buyers and sellers. The trick here is to establish your exit strategy even before you get the contract. Establish your network and find a buyer early. Make sure you have a few initial potential buyers in mind.
Which of these 4 investment ideas for beginners do you think you are ready to take up soon?
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