Investing may seem like a huge stress for some people, but when done correctly investments can help you reach your goals, and improve your well-being. When you are constantly stressed about your finances, your mental and physical health may suffer. Your lifestyle choices are often limited by the amount you have. Whether you have a small or large salary, you can improve your financial health through investments.
The Importance of Investing
Investing helps you to establish financial security. You can build up a safety net through investing to use when unexpected financial emergencies occur. This may help to alleviate some of the financial anxiety that you may face around paying bills and making purchases.
Some investments help you to beat inflation which hit an all-time high of 6.2 percent in the United States during October 2021. Investing can help you save for retirement or big purchases that you may have. You can also achieve the following benefits through smart investments:
Types of Small Investments
If you are starting out with an investment that is only about $500, you may think that it won’t go very far. While you can’t invest in many stocks with that amount of money, there are plenty of investment types that will work with this amount.
The Forex market allows you to trade currencies and you can start with just $500. Trading currencies allows you to take similar risks to the stock market without investing a lot of money. Forex trading can be done at any time of the day because the market is open all hours of the day five days a week.
For people who want to take advantage of the stock market but don’t have a lot of money, they can purchase a direct reinvestment plan (DRIP) that allows them to buy fractions of a stock and have it automatically reinvested. This is great for someone who is short on money to invest and doesn’t have a lot of time to research the market.
Exchange-Traded Funds (ETFs) require no minimum amount of money to invest and feature a passive management strategy. They track an index, sector, or commodity and have multiple underlying assets which make them a popular choice for diversification.
Investors that want a safe investment may want to look into a certificate of deposit (CD). A CD is a savings account that yields a fixed amount of money after a set period of time. The bank pays the interest when you redeem your CD which could be six months, one year, or five years.
How to Get Started with Small Investments
To be successful with investments, you need to decide on a type of investment and stick with it. When you jump from one form of investing to another you may lose more money on commissions and fees than you would make if you had stuck with your initial strategy.