Big Investing With Little Money: 4 Hints

You don’t have to be on “Lifestyles of the Rich and Famous” to invest money, in fact there are many programs that allow for investing with little money. Here are just a few ways you can start investing with just a little money.

Savings Bonds

Investing in U.S. Savings Bonds may sound old school, but it’s still a great way to start investing. Basically with a savings bond you are loaning the government money for 5 to 35 years. In return for the loan, the government will pay you back the money loaned plus interest. You can buy a savings bond for as little as $25. The rates on bonds changes daily, and the rate will be based on the rate on the day of your purchase. Another advantage of savings bonds is they are exempt from state taxes, and you don’t have to worry about federal interest on them until you cash them in.

Certificates of Deposit

Most banks will offer CD’s as a way to save money and make a little money. With a CD you are loaning the bank your money for a set amount of time, and they will pay you interest on that money. Most banks will want you to have at least $500 to open a CD, but some banks will occasionally run specials allowing you to open for much less than that. Be aware that with a certificate of deposit, should you need to withdraw any of the money you will be penalized to do so, and the penalties are usually pretty steep.

IRAs

An IRA is a great way to invest for retirement. This is a popular option for people who don’t currently have a 401K through their employers. To set up an IRA you generally only need about $200 to start. Some banks will require that you make automatic deposits in to the account every month if your initial deposit is under a certain amount. An IRA is generally a pretty safe investment. These are long term investments though and should not be seen as fast money.

Mutual Funds

Mutual funds are not completely risk free, but they tend to be safer than other types of investing. Most often you can start investing with as little as $2500. These funds are different because they are spread through several different companies, so all your eggs aren’t in one basket so to speak. The types of companies the money is spread through are usually safer as well. Mutual bonds are usually spread between real estate investments, bonds, and cash. Since its spread around, if one company does badly then the others can still pull you back up.


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