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Make Your Money Grow With Small Investments
Fill Up The Piggy Bank
Looking At Your Finances
For many of us, we live each day wondering if we will survive till the next payday. How on earth could we possibly be able to save even the smallest amount of money? Yes, it is very hard, but not impossible to do. Getting started is the hardest part.
First, take a good serious look at your finances. Are you making enough to cover your basic expenses? Do you have a budget or some sort of spending plan? Start keeping track of everything you spend to see where you might be able to cut back on expenses that are not necessary. Save all your receipts so you will have a clear picture of where your money is going. Now what can you do without? Do you need that expensive Starbucks coffee, can you cook more and eat out less? Can you clip coupons or buy brand generic brands and buy on sale to save on the groceries? Are you able to car pool with other workers? Can you watch movies at home instead of going out to the theater? There really are some ways that you can cut expenses.
One area you should pay special attention to is debt. Debt is like a noose around your neck and will keep you from your long term savings goals. Do you use credit cards? If so it is time to get rid of them and if you have credit cards with balances, your first priority is to get those paid off and cancel the cards. Interest rates are very high on credit cards so make a plan to pay off these debts as quickly as possible then use the money you free up to invest.
Now can you find ways to increase your income? Overtime or a part time job are just a few possibilities. There are many ways to increase your earnings if you are willing to do so. Even making a few extra dollars will help you get started saving and investing.
Now, hopefully you have found a few ways to cut expenses and also increase your income so that you can begin to start saving at least a small amount of money every week.
Where To Start Saving
Now it is time to start a savings program. But how and where do you start? Start with your local bank and check their interest rates and requirements to start a savings account. Now, right now savings accounts are paying almost no interest but your goal is to save enough to be able to move your money into something that pays better interest. You actually should have a savings account with just enough money to carry you over emergencies . Another choice that pays a little more interest is to buy savings bonds. These can be bought for as little as twenty five dollars. When held to its maturity date, the bond will have increased in value. These are areas to begin savings until you have enough money to invest elsewhere.
Guide For Beginning Investors
The Work Savings Plan
If your company has a 401K saving plan this is something you need to take advantage of. Most plans allow you to have a small amount taken from your pay every payday and the company will also put money in your account. Some companies will match what you contribute while others may put less in than you do. Either way, you are getting a little more money from your company. For example, a company may let you put up to 4% of your pay in an IRA account and the company will match that 4%. So let's say your pay before taxes is $450. At 4% you will contribute $18 and the company will also put $18 in your account. At the end of the year your account should be somewhere around $1700 or more. That is for only one year and this adds up very quickly with you only investing a small amount of money regularly.
Your money will continue to grow as you contribute more, but you will also reap the benefits of added dividends, interest, and capital gains to your account. Something almost magical happens, called compounding. Now you are earning interest on the interest which is definitely a winning situation for you.
For Small Investors
Other Ideas To Invest Small Amounts
If you have managed to save enough money in a savings account and you have your 401K plan set up then it may be time to do some research on some other ways of investing your money. Some of these ways include mutual funds or investing directly with major companies. Here are just two ideas of ways you can invest money in small amounts.
- Invest small amounts of money directly into companies without having to pay broker fees. Most of these companies will allow you to buy one share and then they will let you invest as little as $10 or $25 a month. As your shares in the company grow, you will receive dividends which will then be reinvested and will earn more money for you. These programs are known as DRIPS, dividend reinvestment plans. You can find information on DRIP programs at sites such as Money Paper and Direct Investing.
- Mutual funds are another good place to invest small amounts of money on your own. Do some research and find mutual funds which will allow you to make some monthly investments.
I can't stress enough that you research carefully on any of these options.With any type of investing, you should make sure you study carefully because investing your hard earned money can be risky. Be sure your investments are safe investments and look for a good financial adviser. Many local banks will offer a financial adviser with no charges. There are also many websites and books available that will help you learn good places to invest your money.