You can get rich on small investments, if you start now
Hey Bowtie Nation, Joseph Hogue with the Let’s Talk Money channel and I know a video that will change a lot of your lives out there.
Nation, the Bureau of Labor, through it’s household spending survey shows the average family saves about $500 a month but for most, we know it’s a hell of a lot less. For the households making less than $48,000 a year, it’s more like $100 in savings or less.
And the coronavirus has made it even worse!
Half of the households in a recent survey reported serious financial problems during the pandemic with 35% using up all their savings and one-in-four not able to pay their rent.
And we know that even before the crisis, two-in-five retirees almost exclusively living on social security, about $1,300 a month, to pay the bills!
Nation, we talk a lot about making extra money here on the channel but sometimes it’s just not possible. How every much you make, however much you can save…you have got to find ways to make those small investments go as far as possible.
That’s what I’m going to show you in this video. I’m going to show you five investing strategies to turn those small investments into BIG money! For each, I’ll show you what it is, how much you can make and how to get started.
5 REAL Ways to Make Small Investments Go Farther
This isn’t going to be one of those lame-ass generic videos. I’m not going to cop out and just tell you to invest in stocks. These are five legit ways to turn a little dough into the whole cake and I’m going to rank these from least to highest return.
I know you want that list so we’re going to get right to it but stick around because towards the end, I’m going to reveal three secrets to investing every investor MUST know. Three rules that will work to make you more money on your investments.
How to Invest $100 a Month for a $200,000 Payday
Our first strategy is just going to be good ol’ fashioned consistency and I know this doesn’t sound like an investing strategy but Nation, this is the number one reason people do not meet their investing goals.
Now these next four strategies will be actual types of investments but you have GOT TO START HERE.
Saving just $100 a month, just one less mocha-cocha frapachino a day, can become almost $200,000 for retirement. It’s a return of over $160,000 on your money!
But most people don’t do this. They get excited about investing and jump into the market but they don’t stick to that consistent schedule, investing money every single month. Worse still is others budget everything they can to investing, then they run into an emergency expense and have to take money out of their account.
So I want you to only invest what you can absolutely afford, only as much as you know you can invest every single month. I know it doesn’t sound like some great strategy and it’s not like you hear on other channels, some hot stock tip to pile all your money into, but this single piece of advice WILL make you rich!
Investing Small Amounts in Dividend Stocks
This next strategy for turning small investments into big cash is monthly dividend stocks and a 12% average return.
Now those of you in the nation know, we love dividend stocks here on the channel but it sucks having to wait three months to collect those checks.
With stocks that pay out monthly though, you not only get a more frequent cash flow to pay the bills but you can compound that money faster which is going to mean a higher total return!
Remember, compound interest is just the idea of making money on the interest or returns you’ve made. So instead of waiting three months to reinvest your dividends, you’re reinvesting that cash every month and can immediately start making money on it.
I’ll show you how to find monthly dividend stocks and a few ideas but look at this, just this one change adds almost another $100,000 to your portfolio, turning small investments of just $100 a month into almost $290,000!
Now while you’re looking for monthly dividend stocks, understand that a lot of these are going to be either real estate investments or business development corporations so don’t have all of your portfolio in just this small investment strategy. A good target would be maybe 20% of your money in these and then the rest in our other strategies.
Some examples of great monthly dividend stocks are Realty Income, ticker O, which is a real estate investment trust that owns retail properties like pharmacy and convenience stores and pays a 4.6% dividend yield. The Gladstone Investment Corporation, ticker GAIN, is a BDC that pays a 9.2% dividend and the Invesco S&P 500 High Dividend ETF is a fund of the best dividend payers in the market with a 5.4% dividend yield monthly.
Grow Your Money with Growth Stocks
The next way to invest small amounts for a big portfolio is growth stocks for an annualized 14% return on your money!
Growth stocks are those companies growing their sales and earnings faster than the market. They don’t usually pay much of a dividend but look at these returns! Just investing in the five FAANG stocks; that’s Facebook, Amazon, Apple, Netflix and Google over the last decade would have made you 32% a year on your money…that’s 16-times your investment!
Now I’m not saying you’re going to make 32% a year but even on a modest 14% annual return, growth stocks can turn small investments of one hundred a month into over $428,000 over three decades!
Looking for these types of stocks, you’re not looking for high dividends like the others, you’re looking for companies that are growing the business exponentially. You want to find sales growth of fifteen- and 20% or more along with consecutive years of a higher operating margin. Basically you’re looking for companies that are not only growing sales but getting more profitable as well.
Most of these are going to be smaller companies like $2 billion StitchFix, ticker SFIX, up 22% since recommending it less than two months ago and software company Fastly, ticker FSLY, up 700% since recommending it in March.
Higher Risk and Return for Your Small Investments
One of the most popular types of investments here on the channel, investing in penny stock companies.
So most of you know I come from the venture capital side of the industry, analyzing pre-IPO companies for VC firms and wealthy investors, and these types of investments can return five- and thirty-times your money and an annualized return of 27% a year…
But most investors don’t have access to these types of investments. In fact, by law, you have to have more than a million dollars net worth to invest in venture capital or these early-stage companies.
So penny stocks are the next best thing with returns of fifteen- to 18% a year and higher. And it’s truly amazing how far even small investments can go here, that same $100 a month to $949,000…almost a million dollars over the 30 years.
Now understand, these are high-risk, high-return investments so you need to know how to find and filter for only the best penny stocks. I’ll usually start with a screen on the Webull app for companies under a $100 million market cap, that’s the size of the company, and you’re looking for the smallest companies here because you want to find those undiscovered startups that can become the next trillion-dollar Apple or Amazon.
I’ll then narrow the list to those with volume of maybe 100,000 shares or less traded on a daily basis and again, this is to find those stocks fewer investors are watching.
I’ll also look for a positive return on assets to find companies where management is squeezing as much return as possible out of the assets and maybe use some of these technical indicators like RSI to find cheap stocks.
And this is just going to help me narrow down the list of stocks to research. I’ll then pick maybe the top five companies with the best growth and competitive advantage over peers.
The screener on Webull is a great start and there’s a lot of other great features on the app. Use the link I’ll leave below and Webull will give you a free share of stock worth up to $1,600 when you make your first deposit.
Growing Small Investments in Your Home Business
Our next small investment strategy before we get to those three investing secrets, buying a website and other low-cost business ideas.
And I know Nation, a lot of you just want those stock investing ideas, but honestly this is where the money is at. I started my online business in 2014, almost exactly six years ago, and invested less than $500 over the entire first year. I’ve since grown my monthly income from the business to average $23,000 this year and have made over $550,000!
To be fair, this strategy does take more time than the others but if you want one way to make small investments and turn it into millions of dollars…this is it!
We’ve got a lot of videos on the channel about side hustles and creating your own six-figure business so I’ll link to a few of those in the video description below along with videos detailing the other investment strategies in the list.
Three Investing Rules for Small Amounts of Money
Now I want to share with you those three investing rules that will help you make more money, no matter which of these types of investments you choose.
First is you can beat the market but you have to be smart about it!
I’m not talking about trading stocks on a daily basis or even month-to-month, here I’m talking about finding the long-term trends, the investing themes that are going to drive higher returns.
This is the idea of investing in stocks benefiting from those long-term themes and universal forces like AI or an aging population. These big picture trends are going to be driving sales for every company in the group and give you a better chance at finding those triple-digit returns over ten or 20 years.
Next here is don’t neglect other assets like bonds, gold and real estate in your investments.
And while real estate can produce great returns, these aren’t necessarily only for returns but for protection and rebalancing when stocks drop.
The idea is that with maybe twenty- to 35% of your money in these other assets, when stocks take a nosedive, you’re portfolio isn’t going to fall as much because you’ve got these other types of investments like bonds and gold that will benefit. It’s not only going to protect your money but you can then sell some of those bonds and gold to take advantage of lower stock prices when they come around.
And most important here, treat your investments like a savings account!
This goes back to that first strategy and the idea of consistency but goes even further. The truth is folks, you don’t need returns of fifteen- and 20% and more to live really well. Even that growth stocks return of 14% turned a super small investment of $100 a month into nearly half a million!
Imagine what you could do investing a hundred more? Investing just $250 a month grows to over $700,000 over a few decades of investing. Just small investments for a big payday! It just proves that you can get rich on small investments, but you have to start now!
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.