I’m a huge advocate for investing. I think if you want to maximize your finances, investing a certain amount of your income is one of the best decisions you can make.
Now I know what you’re thinking. Most of us don’t really have that much spare cash to be throwing into a bunch of different endeavors.
You’ve got your own bills, your own expenses and you want to have some that you can just spend at your leisure.
All of that is completely understandable, but it’s actually quite a bit easier to invest than you would think.
As a matter of fact, you can do it with very little. Even if you’ve got just $1000 or less, you can find a way to invest that and come away with worthwhile, long-term returns.
Here’s a couple of the ways that you can go about it:
Dollar Cost Averaging
The first thing that I should probably note here, if you’re investing with a lesser amount of cash such as $1000, you’re probably going to have to go for lower-risk investment strategies.
Dollar Cost Averaging, or DCA as it is often abbreviated to, is a good strategy for someone who has less tolerance for taking risks with their finances.
How it works is relatively simple. You invest a fixed amount of money into a particular company every month, and then how many shares you buy will fluctuate with the stock price.
The amount you invest will buy shares at whatever the current price is. So if the price goes down you will buy more shares and you’ll buy less if it goes up.
Let’s say you invest $100 and the share price for a particular month is $20. That month you will buy five shares, and if it decreases to $16 the following month you’ll buy six shares.
It’s a good way for beginners in particular to invest because it means that there won’t be any emotional reactions to changes in the stock prices.
You are less likely to panic and back out of your investment on a whim if it’s just coming out of your account at a fixed rate every month.
If you’re going to invest by using a DCA strategy, it might be a good plan to see out some high yielding dividend stocks.
These stocks offer a share of the company’s overall profits, so if you invest in them you are guaranteed some form of steady income, regardless of fluctuation of the share price.
So while the fact that it’s low-risk also means that could be somewhat low-reward, DCA has enough benefits for it to be a preferable investment strategy for those with less money to spare.
Artificial Intelligence Investing
I’m not about to pitch you the plot of a science fiction novel that I’ve been working on, Artificial Intelligence Investing is very much reality right now.
The future is here and this particular advancement is only going to get bigger and bigger over the next ten to twenty years.
Things are actually moving at a pretty rapid rate with AI these days, much faster than people realize.
In fact, an awful lot of jobs that right now are being done primarily by humans will probably be taken over by machines in the not too distant future.
Investing is one of the things that will be affected and it actually already is in many ways. People who are new to investing quickly realize that it’s a good idea to hire an advisor.
These are people that are very familiar with the ins and outs of investing and can help you make the best decisions with your money.
Robo-advisors are becoming an increasingly popular alternative to the traditional route of hiring one of these people.
The machines have quickly proven their worth as they can analyze the stock patterns using specific and detailed trading algorithms.
If you use a robo-advisor, it will take however much money you invest and will buy and sell stocks based on these patterns.
It will also take any of the dividends that you earn from your shares and will automatically reinvest them into other beneficial shares.
Using a robo-advisor is definitely one of the best decisions you can make as a newcomer to investing because you can relay the responsibility to a more capable system.
It will also be able to maximize the potential of a smaller amount of cash, better than you could yourself.
So in short, if you want to invest but you’re concerned about how much money you have to spare, there are still ways to do it effectively.
You can succeed as an investor with less than $1000 as long as you approach it from the right angle and take the necessary steps.