Investing, whether its a small or large amount of money is essentially the same. Money is exponential, so the more you have, the more you can make, but that doesn’t mean that because you only a small amount to invest that you can’t invest at all!
There are many ways to invest small amounts of capital in various markets and still gain a good return on your investment.
Firstly, one thing I would like to note is that it’s all about timing and trends in whatever market you trade, be it real estate, the stock market, currency markets or the flea market.
For investing small amounts in the share market, here is an example of a timing strategy:
The share market has just crashed! Everyone panics, loses their shirts, sells out, makes the shares drop dramatically! You, yourself have never traded before.
Do you steer away from the markets from lack of knowledge? Hell, no! You’re Arny up against the Predator!
It’s the time to buy, especially as the market just starts to recover itself. Give it a few days to weeks and now that people are losing the dazed look of people having realised they panicked and cashed out their life savings at the bottom of the trend, you start buying the shares that they once owned in great companies at unreal prices.
You have just learned how to trade and own 1% of a company that a few weeks ago, you couldn’t have affored 1 share in, let alone 1%.
That strategy (as a stock market crash is) was just a dramatic version of what happens every day on the stock market. All stocks, if they’re being actively traded, peak and trough daily.
Here is another fact for you about the share market.
Most people, especially Mum and Dad investors tend to buy when they hear someone say “I made $xxx on this stock. You should buy some.”
There is a problem with that methodology.
Those people who mentioned the “greatest share in the world that they made a killing on” have already cashed out and have made their money. What you would be buying is probably a share at its peak.
Usually, within a short amount of time, that share will go back to its normal trading range and if you hold onto it expecting it to keep going up (and it rarely will), the share will go back to its original value, with your capital going with it, reducing as the share price does.
To make money in the market, you need to think ahead, not always follow the herd. Think about what’s going to happen and visualise what you think will happen. You may not always be correct, but remember, even the greatest stock traders only ever win 70% of their trades.
Its cutting their losses quickly on those losing trades and preserving their investment capital that keeps them in the game.
If you have a small amount of capital and think the stock market is your cup of tea, I would suggest purchasing penny stocks at a time the stock market is beginning to rise from a steady decline.
Another vehicle you could possibly use to fuel your investment growth is tax deeds.
By doing some research and finding properties available at tax deed auctions, you could purchase yourself properties for as little as the taxes and interest owing on the delinquent property.
Some research and investigation is required to ensure what you’re purchase isn’t a road, swamp or has some debt against the title, but there is a lot of money to be made from this type of strategy.
So there you have it, a quick guide and a couple of ideas to investing small amounts of capital and investing for your and your family’s future.
I hope you’ve enjoyed my article.