How to Start Saving or Investing on Your Modest Income

How to Start Saving or Investing on Your Modest Income

Every responsible adult reaches a point when they want to save some money for a rainy day or make an investment that will generate more money down the line. These are both great ideas, but we face problems executing them. Getting the necessary funds is often difficult, and most people don’t have the necessary knowledge or experience to make profitable investments.

Here are a few tips that address either one or both of those problems.


  1. Invest in your employer’s pension fund

It is easy to find yourself overwhelmed by expenses. Each month as you receive your paycheck a number of old costs that need sorting is quickly joined by new purchases that need to be made for the future. All of these end up leaving you with very little room to actually consider saving. A way to bypass this is to have your savings done before the paycheck ever reaches you. By enrolling in the pension plan of your employer, you ensure monthly savings before you get the chance to hesitate or change your mind. If you feel that doing this might leave you with even less money than you require for that period, don’t worry. You should be able to determine just how much or what percentage of your income you want invested, letting you pay in just what you are comfortable with.


  1. Use an automated investment platform

Sometimes, the best way to invest is to not do the investing by yourself. Taking the work out of your hands and putting it in the hands of a programs will save you the stress and worry you might otherwise face with every decision you make. There are several automated platforms for investment, each of them has been programmed with complex algorithms that help them determine their investment patterns. Many giant organizations already use these programs to determine the best investment options for themselves and their clients. Additionally, these platforms are accessible via your mobile phone or laptop. This means that you are able to begin investments, add more funds, or make withdrawals from anywhere you are.


  1. Invest in Bonds

Bonds are a way for regular people to loan money to the government or a company. They are pretty easy investments because of their fixed interest rates and durations. So you know precisely what amount you will be receiving and when you will be getting it. Bonds are fairly low risk investments, especially government bonds, but they often have higher interest rates than other similar low risk investments. One possible downside of bonds lies in the possibility that over time inflation will overtake the interest rates. This means that by the time your money is out, it is worth less than it was before and has its purchasing power reduced.


  1. Put your money in low-initial-investment mutual funds

Mutual funds are a great place for new investors to begin, they involve portfolios made up of a diverse number of assets. This diversity balances out the risk factor which is best for those who need assurance in that regard. Additionally, by placing their money in mutual funds newcomers will enjoy professional management of their investment. The disadvantages of a mutual fund however are their somewhat high initial investment requirement, which will often exceed what someone struggling to save is able to afford. However, with certain companies you are now allowed to negotiate terms based on your income that lead to them reducing the minimum investment. Often this will require some form of future commitment from you.


  1. Play it safe with low-risk investments

There is an element of risk with every investment. Skilled traders and brokers are able to read the markets well enough to understand the best and most profitable places to place investments. They determine when the investments about to lose value and pull out in advance to save losses. However, even the skilled and experienced brokers are not right every time and you are likely far from that. If you are simply looking for a way to have money saved up for a time in the future when you might need it, then the best option for you would be a low risk investment. There are many such investment options, most of which have some guarantee that you will receive your money back without a loss in amount. However, the standard rule is that low risk investments will bring low returns, so you are not likely to get richer from this type of investment.


  1. Put your money in the bank

This is probably the simplest way to save nowadays, simply put your money in your savings account. While in there, the amount will slowly increase. This is based on interest rates, which are generally low on savings accounts. Leaving your money in the bank will not generate much more money, but they are one of the more assured low risk investment options. However, if you are really serious about saving, you could put your money into a fixed account. These have higher interest rates, but require a long term commitment, during which you will not have access to your funds.


  1. Try the cookie jar approach

This might seem simplistic based on all the previous investment entries, but it is in itself a viable option if followed through. The basic idea here is to have a small jar, or other such receptacle, where you regularly place small amounts of money. After some time, this money will be substantial, at this point you take it and formally invest it. This approach is especially useful if your income source pays in bits or if you find yourself unable to raise a substantial sum. It helps if you structure your savings in the cookie jar according to a system.  

Regardless of how you do it, the most important thing is that you at least make the effort to save and invest for your future. The amount or method does not matter as much as the actual act.

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