How to Start Investing with Little Money and Other Tips for Making Small Investments with High Returns
If you don’t think it’s worth it to invest little amounts, I’m going to show you how to turn a cup of coffee into a lot of money! I’ll show you how small investments can make a lot of money, how to invest and then reveal the top three ways to invest little or no money for big returns! We’re talking small investments that make money, today on Let’s Talk Money!
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Nation, I know the feeling. You want to invest but it just doesn’t seem worth it. You might be able to invest fifty or $100 a month but your investments just don’t seem to be going anywhere.
Even worse, you feel like on small amounts, you have to get lucky in high risk investments but then end up LOSING money when the stock craps out!
You don’t have to break your budget or skimp to invest. Let’s use an analogy most of us can relate to…COFFEE! A recent survey found that 64% of Americans 18 and older drink coffee every day. The 10 pounds of coffee consumed by the average person works out to over $2,130 a year or $177 a month in go-juice!
But you probably wouldn’t say coffee is killing your budget, because it’s only a few bucks a day. It’s something we just have as our regular spending.
How to Invest with Little Money for Bigger Gains
I want to show you how to do the same thing with investing. I’ll show you how to turn $150 a month, less than the average amount spent on those little black beans into a six-figure payday. I’ll show you how to invest with little money and then, towards the end of the video, I’ll reveal three small investments that will make you big money!
In fact, even if you don’t feel like you can swing $150 a month to invest…if you can invest just $1 a day, I’ll show you how to make your money work for you. One dollar a day…that’s less than you pay Sally Struthers so I know you can do it!
Even a buck a day becomes $37,000 in two decades. It might not be enough to retire on but if you’re going to live in your car, you might as well do it in style!
So if you know you want to invest, even small amounts, how much should you invest? How much is enough to reach your goals?
Well, do you want to live in a beemer or a Lamborghini?
This chart shows the portfolio values for investing different amounts, and even that $1 a day, just $30 a month grows to over $150,000 in 30 years. Invest that $150 a month, just $5 a day and less than most people spend on coffee and you can retire on more than $780,000!
That’s enough to buy a Lamborghini and nine Beemers to live in!
Now you’ll hear all kinds of rules for how much to invest from ten to 20% of your income and more but really it comes down to two things, how much do you need to invest to meet your goals and how much still leaves room for a little fun right now.
And that last one is just as important as the first. Nation, so many YouTubers and finance ‘experts’ will tell you to skimp and save every penny you can to invest but what good is it being miserable now on the hope for a happier retirement?
Too many investors burn out by cutting their budget to the bone, saving every penny and then they just give up because, hell, who wants to be a millionaire if it means eating nothing but ramen noodles for the rest of your life?
For most people, investing to reach your goals is going to be somewhere between that $150 to $300 a month. The important point though is just to get started. Start investing now with whatever you can afford and build up to that point.
But I want to get a feel for where everyone is at in the community. How much do you feel like you can invest each month without skimping and breaking your budget. So scroll down, make that commitment to yourself, by sharing in the comments below, how much are you going to invest each month.
I’ll reveal those three small investments that make money next but first, how to invest those little amounts to make it go farther!
Important Tips to Invest Your Money Wisely
First, and most important is you have to invest on a platform that doesn’t charge you to buy stocks. Fees will kill your portfolio, especially if you’re paying $5 every time you buy or sell a stock.
Fortunately, this one has gotten easier over the last few years with lots of platforms moving to a commission-free model. I use M1 Finance and Webull but Fidelity, TD Ameritrade and Robinhood are also popular options.
Get a FREE share of stock worth up to $1,600 when you open a Webull investing account – learn more here.
In that same idea, if you’re going to invest in exchange traded funds, so those groups of stocks in a sector or theme, make sure you pick an ETF with an expense ratio of 0.2% or less. That’s the annual percentage the fund manager charges investors with the average for all ETFs around half a percent. Most of the Vanguard and Fidelity ETF funds charge less than a quarter of a percent annually and you’ll find every theme or asset you want.
You also want to choose an investing app that allows fractional share investing. That means you can invest $20 in a stock no matter what the share price is, you could invest $20 in Amazon instead of shelling out the $3,000-plus for a whole share.
Best investing apps for fractional share investing include M1 Finance, Fidelity, Vanguard and TD Ameritrade.
Put your investments on auto-pilot and never pay a fee to buy or sell stocks with M1 Finance – learn more here.
Last tip here before we get to those three small investment ideas, deposit money into your investing account weekly or bi-weekly but invest monthly or quarterly.
I want you to get that money into your investing account, get it out of checking so you’re not tempted to spend it. Some investing apps will give you the option to direct deposit regularly, so setting it up to automatically invest twenty or thirty dollars a week. Whatever you invest, get it out of the bank where you might be tempted to spend it.
But don’t feel like you have to buy stocks immediately whenever you have cash in your account. I want to make this as easy and stress-free as possible so maybe wait for the end of the month or even every three months to invest your money.
3 Small Investments You Can Make for High Returns
You’re set up with how much you want to invest and how to do it, now I want to reveal three small investments you can make that will make you more money!
First here is growth stocks and these have been hit lately but there’s no better part of the market for growing your money over time!
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.
If you want ideas on growth stocks, I’ll link to a free report below sharing the top five stocks in my portfolio, five growth stocks in the biggest trends I’m following over the next decade. One of those stocks is Salesforce.com, ticker CRM, a company that pioneered the software-as-a-service model but has really expanded into a conglomerate of cloud-based solutions in marketing, data analytics and sales.
Sign up on Stockcard for free and make stock-picking easy with the research tool I use! Use promo code: bowtienation for an exclusive discount!
And salesforce is one of my favorites because it’s going to benefit from so many of the disruptive trends I’m following from artificial intelligence to remote work and the blockchain.
Management is estimating a total addressable market of $175 billion by 2025 and booked 28% sales growth last year to $17 billion. Analysts have an average price target of $276 a share, more than 30% above the current price and it’s a great long-term growth story but check out those other four growth stocks in my portfolio with the link in the description.
Another great way to turn small investments into big money is with monthly dividend stocks.
Now these aren’t going to give you the same returns as those growth stocks, you can expect anywhere from eight-percent to twelve or 15% a year on these, but the real power is in that consistent dividend.
The idea here is receiving that dividend cash flow every month is going to be your motivation to keep investing. Even if it’s just a few bucks a month, constantly being able to see your investments pay off is great motivation.
And that’s what it’s all about, just staying motivated to invest. Remember that chart, even investing as little as a dollar a day turns into almost $40,000 as long as you stick with it!
Bonus: My Favorite Monthly Dividend Stock
I’ll share my favorite monthly dividend stock here to get you started and will link in the video description to a video with the seven dividend stocks that pay my rent, seven monthly payers for that constant cash flow.
But to get started, it’s hard to go wrong with Gladstone Capital Corporation, ticker GLAD.
Gladstone is a business development corporation that loans money to and invests in mid-size companies, making it like a venture capital investor and bank all in one. It’s a great cash flow business model and the shares pay a 7.3% annual dividend paid out every month.
Better though is the stock has produced an 18% annual return over the last five years which means, not only are you collecting that constant dividend but you’ll watch your portfolio grow as well!
Our third small investment to make money, and easily my favorite, is to start your own business.
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 seven years ago, and invested less than $500 over the entire first year. I’ve since grown my monthly income from the business to average over $53,000 this year and have made nearly $850,000!
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!
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.