Best Investments for Beginners on a Budget

By Nicola Smith Jackson

Hi, Empire Builders

It’s Dame Nicola! 

There’s a group of people that has a higher probability of coming out on top in this inflationary economy, they are the investors of the world today .  Investing is a word that could conjure mixed emotions , especially if you haven’t been regularly making deposits with the intention of reaping a return. It can make one feel insecure even though the purpose of investing is to create financial security then eventually freedom which simply gives you more options in your lifestyle.  Investing is a skill that everyone needs to have. Unfortunately, it wasn’t taught in school.  I’ve been thinking about how sometimes you may want to do better but may get stuck in a situation where we’re not able to invest as much as you wish we could.  If you are experiencing this , I want you to hold your head up because there is hope for you to become an investor even if you’re a beginner.  

The TRUTH IS , all investors were once a beginner (especially retail investors) myself included.  These are the people who answered the wake up call that you can never labor yourself into wealth.  You will have to leverage the money you earn so it can grow.  We will have financial ups, downs, this is no reason not to invest .  Even if you have had humble beginnings it doesn’t mean you have to have a humble ending.   I always share my story , the fact that I wasn’t born with a silver spoon in my mouth is to inspire you to stretch yourself beyond what your last generation has been able to accomplish.  What I’ve learned is that our challenges are meant to be our teachers, not our masters. As long as we actively seek ways to grow you realize that all problems are temporary and could also become profitable if you have a positive not a pessimist perspective. If you become a person that embraces new and better ways of managing money you can create positive change in your life and you will more than likely succeed far above many others .  

You may ask why becoming an investor is so important? Well,  because investors are amongst the wealthiest people on the planet . As well as people who don’t invest to grow money will either work until they die or at worst die broke .   Let’s keep it real , there will always be life events like having a baby , becoming ill, being a caregiver for an aging parent or the natural process of aging that may slow your grind . So,  the truth is things like inflation and taxes will decrease what you have without you having a say in the situation.  This makes it nearly impossible to make it these days on income you earn from a job or small business alone.  

The worst thing you can do is allow the unknown about investing to deter you from doing it . Also, don’t listen to those people who believe you can’t afford it and think you should invest from what’s left over from your budget or after you make profits from your business. They are wrong, you should pay yourself first with interest.  You don’t need a lot of money to begin investing either. This couldn’t be furthest from the truth .  But if you ever want to accumulate and keep a lot of money you need to start investing. 

Fun Fact : Did you know that you can turn $1 into 1,000,000,000?  Yes , this is totally possible with the power of compound interest.  Albert Einstein says it’s the 8th wonder of the world!  According to Investopedia, compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the magical thing that happens when you reinvest interest earned from your  investments , rather than paying it out or spending the profit. You will earn interest in the next period then earn on the principal sum plus previously accumulated interest.  In essence stacks on stacks ! 

If you are not excited about beginning to invest. You may as well say you are excited to work forever knowing you may never get rich.  Obviously there are  pros and cons to everything.  The best way for a beginner to get their feet wet in investing is to start slowly. Investing only smaller amounts of cash into things you understand .  Don’t feel ashamed to start where you are .  Until you learn the ropes, become a student.  Money school is something you never graduate from .  The more you learn the more you earn .  Even if you have a financial professional helping you out (which I strongly recommend) you should still understand how to communicate with those helping you .  This can potentially make you more  money without forfeiting tens of thousands of dollars due to newbie mistakes. 

Note: All investors including beginners should have an allotted amount of money in your budget dedicated to invest . This should not be your food or bill money but you could sacrifice some of your “fun money”. At some point you have to decide to have less now to have more later or regret you didn’t start being smarter with money. 

Here’s a few investments for beginners on a budget: 

Try starting out with some of the simplest investments to grasp:

Life Insurance. Whole Life Insurance (Not Term Life). This is one of the oldest, easiest and most powerful investment strategies for beginners that may offer guaranteed returns.  Most people shy away from this because they believe that life insurance is best used by your loved ones when you die. Obviously an insurance professional should guide you into a policy that will allow your investment to grow. You would be surprised with the right policy set up the right way you could yield upwards of 6% + and borrow against your cash accumulation with favorable tax benefits as well as income protection and replacement in case of disability or death. 

Online Business. Whether you start selling mini courses, ebooks, e-commerce, affiliate or network marketing to name a few, these are all options that could be low start up costs and possibly promising a return on investment.  Having an income that you can scale to give yourself a raise when you want to is a good idea.  There are many opportunities available but choose one you can commit to.  Be willing to invest your time, effort and money. This will give you seed money for other ventures.  Don’t skimp

on getting mentorship to accelerate your results. 

Bonds. Bonds are typically a safer investment than individual stocks. This is because a stock is an investment without a guaranteed return, while a bond is similar to a loan and has a promised return, plus interest. There is a difference between promised and guaranteed. No investment can be guaranteed but with bonds, you know what to expect. Look for investments with a low probability of default (the chance that the company would close its doors or file bankruptcy). Bonds are generally paid back to you by the end of the year. However, the terms can be different for each agreement. The larger the bond, the larger the profit. But remember, you’re always going to make more money on a higher interest bond. So, you may be better off investing your funds in one high interest bond rather than two lower interest bonds. 

ETFs – An exchange-traded fund is an investment fund that trades on a stock exchange. 

They came along 1993 and became popular for investors who wanted alternatives to mutual funds because They typically have much lower expense ratios and fees and better returns as they are actively traded.  ETFs may hold positions in many different assets, including stocks, bonds and sometimes commodities. If you are on a budget you have the opportunity to invest in several companies with one single purchase at a fraction of the cost. Not only are ETFs cost effective it gives diversity to your portfolio with less purchases or transactions.  You purchase an ETF like you would purchase a single stock with the ticker or symbol that represents that compilation of assets. ETFs most often track a specific index such as the Standard & Poor’s 500 or the Nasdaq 100, meaning it holds positions in the index companies at their same relative weights in the index. You may hear that index funds are safer and generally have more predictable returns over time because they include a compilation of the top performing companies in their sector where other ETFs may track companies of different weights. 

Fractional Stock Shares. A fractional share is when you own less than one whole share of a company stock. Although all brokerages do not allow you to purchase fractions of shares upfront there are several who do . Some like Charles Schwab and M1 Finance will allow you to purchase stocks in this way.  If you are on a budget investing in fractional shares may be an option for you. This gives you the ability to buy stocks based on the dollar amount you want to invest.  You may end up with a fraction of a share initially then a whole share over time.  This can also allow you to buy portions of several stocks to create diversity in your portfolio.  

For example,  if a stock cost $400 for 1 share and your budget was $100 you will own ¼ of that stock. However, you can invest $100 every month for 3 more months and eventually own a full share .  Actually, with the power of compounding and dependent on the performance of that stock you may possibly only need two more deposits of $100 to end up with a full share of the stock. 

It’s highly encouraged to do your homework.  You can easily Google a company, read about it’s leaders and vision for the future. Publicly traded companies for the most part are open books .  It’s good to stick with the safer, seasoned companies that you’re familiar with and have proven to be stable money makers over a period of time. Generally, the “safer”  stocks are with well-established businesses that sell everyday items that people will purchase whether or not an economic crisis is in place. Businesses that sell moderately priced personal care items, food, and cleaning products would be ideal.  

Of course, there is risk involved so contact a fiduciary. A financial professional that has your best interest as a priority to get additional guidance and direction. Keep in mind that all stocks won’t skyrocket overnight, but then again, it is very unlikely to plummet overnight as well unless some extreme event happens with the company. Even as a beginner never forget investing is a long term game even if you gain earlier in your journey. 

There are several other investments that can be profitable if you are a beginner on a budget. You may have wondered why I didn’t include investments like real estate, CDs and mutual funds .  Well. that was on purpose; those are strategies if you are on a budget it may not be the lowest hanging fruit for you.  Of course I am a fan of real estate investing (it’s how I created my first 7 figures in assets but through .  However, real estate has more requirements like better credit and higher down payments as it’s not a primary residence not to mention if you are on a budget and you have a tenant who doesn’t pay their rent .  That’s a disaster.  With CDs and mutual funds, there are higher restrictions on access to your cash and higher fees.  If you are tight on funds the brokers and banks will get the bigger piece of the pie.  They aren’t worth your money .  Besides , retail investing has come a long way since the time when the everyday person saw value in those types of investments.  If you have these types of investments I still celebrate you as many don’t invest at all. 

A smart strategy is to spread your risk and return through a diversified portfolio of investments, some with lower risk and others with moderate risk. Only go for high-risk investments if you have money to burn! This strategy will let you enjoy consistently positive returns throughout the years. Let me know if you decide to invest in any of these options and share with your friends and family so they can start investing too. Also, don’t forget if you want to know more about investing and money making you can check out this website to see how you can access more tips and resources to get you more knowledge on investing.  As well as check out the Money Mansion Blueprint while you are there. It’s a proven  path to prosperity. Hopefully this information inspires you to consider becoming a committed investor even if you are on a budget. 

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